Health and Healthcare
2 Large Cap Biotech Leaders Pay Big Dividends and Have Huge Upside Potential
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We cover dividend stocks often at 24/7, as they have provided investors with much better income streams than U.S. government and corporate bonds have over the past five years. The usual suspects often are written about as great buy-and-hold ideas, like telecommunications, utilities, consumer staples and real estate investment trusts because the dividends are dependable. However, some of those stocks lack big upside potential and are considered more of a bond proxy to many investors.
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One area that often is ignored by growth and income investors is biotechnology, as the volatility in the segment (especially with companies that have only one or two income-producing therapies or drugs) is sometimes deemed too risky. We found two companies that are industry leaders but their stocks have been absolutely hammered, and both pay dividends of at least 3.5%.
While not suited for conservative income investors, these stocks could have huge total return potential and offer investors with a touch more risk tolerance some very tempting entry points. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Amgen
This biotech giant remains a top stock for investors to buy and a safer way to play the massive potential growth in biosimilars. Amgen Inc. (NASDAQ: AMGN) discovers, develops, manufactures and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology and neuroscience.
The company’s products include the following:
- Enbrel to treat plaque psoriasis, rheumatoid arthritis and psoriatic arthritis
- Neulasta reduces the chance of infection due a low white blood cell count in patients cancer
- Prolia to treat postmenopausal women with osteoporosis
- Xgeva for skeletal-related events prevention
- Otezla for the treatment of adult patients with plaque psoriasis, psoriatic arthritis and oral ulcers associated with Behcet’s disease
- Aranesp to treat a lower-than-normal number of red blood cells and anemia
- Kyprolis to treat patients with relapsed or refractory multiple myeloma
- Repatha, which reduces the risks of myocardial infarction, stroke and coronary revascularization
Amgen also markets Nplate, Vectibix, Mvasi, Parsabiv, Epogen, Kanjinti, Blincyto, Aimovig, Evenity, Amgevitatm, Sensipar/Mimpara, Neupogen, Imlygic, Corlanor and Avsola. The company’s five key marketed products are among the top-selling pharmaceutical products in the world, with the company having expected collective revenues of more than $25 billion in 2021.
Shareholders receive a 3.49% dividend. BMO Capital Markets has an Outperform rating on Amgen stock, as well as a Wall Street-high $301 price target. The consensus target price is $247.45, and the final trade for Thursday came in at $206.78 a share.
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Gilead Sciences
This stock is trading a very reasonable 9.53 times estimated 2021 earnings and has big-time upside potential. Gilead Sciences Inc. (NASDAQ: GILD) is a research-based biopharmaceutical company that discovers, develops and commercializes medicines in the areas of unmet medical need in the United States, Europe and elsewhere.
The company provides Biktarvy, Genvoya, Descovy, Odefsey, Truvada, Complera/Eviplera, Stribild and Atripla products for the treatment of human immunodeficiency virus (HIV) infection; Veklury, an injection for intravenous use, for the treatment of coronavirus disease 2019; and Epclusa, Harvoni, Vosevi, Vemlidy and Viread for the treatment of liver diseases. It also offers Yescarta, Tecartus, Trodelvy and Zydelig products for the treatment of hematology, oncology and cell therapy patients.
In addition, Gilead provides Letairis, an oral formulation for the treatment of pulmonary arterial hypertension; Ranexa, an oral formulation for the treatment of chronic angina; and AmBisome, a liposomal formulation for the treatment of serious invasive fungal infections. Gilead Sciences has collaboration agreements with Arcus Biosciences, Pionyr, Tizona, Tango Therapeutics, Jounce Therapeutics, Galapagos, Janssen, Japan Tobacco, Gadeta, Bristol-Myers Squibb, Merck and Novo Nordisk.
Investors will be very happy to take a 4.22% dividend to the bank every quarter. Oppenheimer has a Buy rating, and its $100 price objective is the highest on Wall Street. The consensus target for Gilead Sciences stock is $76.03, and Thursday’s closing print was $68.15 per share.
Two of the most established and mature biotech companies have been hit hard and are offering some of the best entry points in months. Again, while better suited for growth and income investors with some risk tolerance, these are outstanding names to own in a space that can provide some incredible growth.
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