Big pharma stocks are not exactly the traditional option for making millions. With huge market capitalizations and a fast rate of expansion, it is easy to see why a lot of the growth traders eschew them for nimbler, smaller biotechs that can potentially multiply in price overnight.
The two healthcare stocks that I will discuss pay a dividend that is higher than the market’s avg. yield of 1.27%, but the real advantage these stocks have is that they produce medicines that healthcare systems and patients will need more or less forever. They probably will not always perform better than the market but using the income coming from their dividend might pad your wallet continuously over the coming years, and getting paid is the key to making a fortune.
Grifols makes plasma-derived medications that are necessary for a number of hospital procedures ranging from rehydration to cardiopulmonary bypasses, producing trailing revenue streams of $5.2 billion in the process of this. Because the easiest method to manufacture these medications is to take them directly from human plasma, it also has 370 donation centers around the world.
Though the business faced a hard time finding plasma donors during the onset of the pandemic, things are now normalizing quickly, and that means newer investors are well positioned to benefit in the near future.
One of the stock’s largest appeals is its forward dividend yield of about 7.69%, which is really big. What’s more, its dividend has seen growth of about 180.1% in the past five years, and there is likely more to come. The payout will not make anyone rich overnight, but if it is kept in your portfolio for years, you will definitely get richer.
Moving forward, Grifols predicts to benefit from plasma donors that have been increasing in volume, which will drive down the costs of compensating individuals who choose to donate. At the same time, management expects the demand for plasma proteins will keep rising, buoying the fair market value of its products. That will surely put a downward pressure on the cost of goods that are sold, which accounts for above 57% of its quarterly revenue, thereby increasing its profit margin as well.
2. Bristol Myers Squibb
As a traditional big pharma company, Bristol Myers Squibb creates and commercializes medications for immunological disorders, cancers and even hereditary conditions. Its huge pipeline has dozens of late-stage projects that are advancing toward the regulatory submissions, and it might have as many as seven new regulatory approvals this year alone, with much more to come throughout the next decade.
From 2022 to 2024, management expects that it will have free cash flow of around $50 billion. With that cash, Bristol Myers will be hiking its dividend, making acquisitions and performing share repurchases, all of which will reward the investors who were brave enough to stay around during the transitionary period.
Presently, its forward dividend yield is about 3.37%. If the pharma keeps raising its dividend each year at the same pace as the past three years, it will grow by over 31% before year 2026, even as its revenue mix changes. And, with the increase from its many new drug approvals, shareholders will likely be sitting pretty by year 2030.