Pfizer Inc. (PFE), Merck & Co., Inc. (MRK), Teva Pharmaceutical Industries Ltd (ADR) (TEVA): Four Big Drug Companies With Big Juicy Yields

On the flip side, the company maintains a relatively strong pipeline. It maintains several drugs in Stage III development including two new cancer drugs that have shown promise. The stock remains expensive by most measures (a P/E ratio of 20, for example) and analysts are forecasting little growth, so the success of some of the late stage drugs will help support a robust current dividend yield of 3.60%.

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is easily the cheapest stock of this bunch. Sporting a P/E ratio of just 7 and a price to book ratio of 1.44, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) appears to be a solid value play. On the surface, its fundamentals would suggest that this is a good stock for buy and hold investors, but read a little deeper and things get a bit murkier.

Revenue dropped 4% overall from the same year ago period thanks in large part to a 27% decline in the United States generic drug line of business. The generic drug business has fallen out of favor lately and it’s unclear if the company will be able to make up for the revenue loss in other segments of the business like emerging markets or brand name drugs.

For those willing to ride out some of the short-term volatility, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) looks like a compelling value opportunity. Any return potential is enhanced by its current 2.80% dividend yield although that yield ranks as the lowest among this group.

Conclusion

If you’re simply looking to add a solid dividend yield to your portfolio that’s supported by a healthy balance sheet, then big pharmaceutical companies like the ones listed above are good choices. Whether it’s patent expiration or domestic revenue growth, each of these companies are facing varying degrees of short-term uncertainty.

Long-term, these companies should be able to deliver on revenue and earnings while paying out a sizable dividend. Short-term investors will want to weigh the short-term risks of revenue uncertainty and drug trial success before committing.

The article 4 Big Drug Companies With Big Juicy Yields originally appeared on Fool.com and is written by David Dierking.

David Dierking has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. David is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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