First-quarter earnings kick off in a big way on Friday with the major banks posting their results. It is likely that for the second quarter in a row earnings at some of the biggest and best U.S. companies will decline.
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Many top analysts and strategists feel there is an excellent chance that we could be in for a big-time earnings recession as the year goes on. The reality for stock investors is that higher interest rates, combined with much tighter lending standards after the Silicon Valley Bank debacle, could hurt many of the top companies across the United States. Amazon alone is laying off 30,000 people, and it is a nasty trend showing up everywhere.
While many are suggesting short Treasury paper and money markets, for long-term investors looking for growth and income, health care is the place to be in 2023. Demand is growing as the country ages, pricing remains strong and, plain and simple, it is one sector that never goes out of style as it generally is not hit by cyclical swings.
We screened our 24/7 Wall St. health care research database looking for the highest-paying dividend leaders that were rated Buy across Wall Street. The following seven companies are all very solid players in the industry, two of which are top European companies, and all make good sense for growth and income investors looking for stocks with solid total return potential.
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 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:
- Enbrel to treat plaque psoriasis, rheumatoid arthritis and psoriatic arthritis
- Neulasta reduces the chance of infection due to a low white blood cell count in patients with 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
Shareholders receive a 3.40% dividend. Goldman Sachs has a $290 target price on Amgen stock. The consensus target is lower at $258.29, and the final trade on Tuesday was for $251.43 a share.
Gilead Sciences
This stock is trading at a very reasonable 12 times estimated 2023 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 has collaboration agreements with Arcus Biosciences, Pionyr, Tizona, Tango Therapeutics, Jounce Therapeutics, Galapagos, Janssen, Japan Tobacco, Gadeta, Bristol-Myers Squibb, Merck and Novo Nordisk.
Gilead Sciences stock investors take a 3.63% dividend to the bank every quarter. Mizuho’s $101 price objective is the highest on Wall Street. It is well above the $89.00 consensus target and Tuesday’s closing print of $82.54.
Merck
This remains a leading health care stock for conservative investors. Merck & Co. Inc. (NYSE: MRK) operates as a health care company worldwide through the following two segments.
The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular and diabetes, as well as vaccine products, such as preventive pediatric, adolescent and adult vaccines.
The Animal Health segment discovers, develops, manufactures and markets veterinary pharmaceuticals, vaccines and health management solutions and services, as well as digitally connected identification, traceability and monitoring products.
Merck serves drug wholesalers and retailers, hospitals and government agencies as well as managed health care providers, such as health maintenance organizations, pharmacy benefit managers and other institutions. It also serves physicians and physician distributors, veterinarians and animal producers. The company has collaborations with AstraZeneca, Bayer, Eisai, Ridgeback Biotherapeutics and Gilead Sciences.
Investors receive a 2.60% dividend. Merck stock is the top health care play on the Goldman Sachs Conviction List of top picks. The firm’s $122 target price compares with a $118.71 consensus target and Tuesday’s close at $112.49.
Novartis
This is among the world’s largest pharmaceutical drug makers by sales and remains a top international pick across Wall Street. Novartis AG (NYSE: NVS) researches, develops, manufactures and markets health care products in Switzerland and internationally. The company operates through two segments.
The Innovative Medicines segment offers prescription medicines for patients and physicians. It also provides cardiovascular, ophthalmology, neuroscience, immunology, hematology and solid tumor products.
The Sandoz segment develops, manufactures and markets finished dosage forms of small molecule pharmaceuticals to third parties. It also provides protein-based or other biotechnology-based products, including biosimilars, as well as biotechnology manufacturing services and anti-infectives, such as active pharmaceutical ingredients and intermediates primarily antibiotics. Novartis has a license and collaboration agreement with Alnylam Pharmaceuticals to develop, manufacture and commercialize inclisiran, a therapy to reduce LDL cholesterol.
The dividend yield here is 3.66%. BofA Securities has set its price target at $113.50, and Novartis stock has a $107.13 consensus target. Shares closed at $95.80 on Tuesday.
Pfizer
This top pharmaceutical stock was one of the biggest winners in the COVID-19 vaccine sweepstakes. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes and sells biopharmaceutical products worldwide.
The company offers medicines and vaccines in various therapeutic areas, including the following:
- Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
- Biologics, small molecules, immunotherapies and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena and Braftovi brands
- Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga and Paxlovid brands.
- Pneumococcal disease, meningococcal disease, tick-borne encephalitis and COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba and the Prevnar family brands
- Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis and Cibinqo brands
- Amyloidosis, hemophilia and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX and Genotropin brands
Pfizer stock comes with a 3.93% dividend. The $62 Goldman Sachs price objective is higher than the $50.92 consensus target, and shares ended Tuesday’s session at $41.79.
24/7 Wall St.Sanofi
This is another top pharmaceutical company in Europe trading at very reasonable levels. Sanofi S.A. (NYSE: SNY) engages in the research, development, manufacture and marketing of therapeutic solutions in the United States, Europe and elsewhere.
Sanofi provides specialty care products, including human monoclonal antibodies; products for multiple sclerosis, neurology, other inflammatory diseases, immunology, rare diseases, oncology and rare blood disorders; medicines for diabetes; and cardiovascular and established prescription products. It also supplies poliomyelitis, pertussis and Hib pediatric vaccines, as well as influenza, adult booster, meningitis and travel and endemic vaccines.
In addition, Sanofi offers allergy, cough and cold, pain, digestive and nutritional products. Other products included daily body lotions, anti-itch products, moisturizing and soothing lotions, and body and foot creams, as well as powders for eczema. It also has various pharmaceutical products and vaccines in the development stage.
Shareholders receive a 3.46% dividend. The $65 BofA Securities price target is the same as the consensus target. Sanofi stock closed on Tuesday at $55.22.
Walgreens
This huge drugstore chain operator is a safe retail play for investors looking to add health care now, and it trades at a cheap 7.5 times 2023 earnings expectations. Walgreens Boots Alliance Inc. (NASDAQ: WBA) operates as a pharmacy-led health and beauty retail company. It operates through three segments.
The Retail Pharmacy USA segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores. It also provides specialty pharmacy services and mail services; this segment operates nearly 10,000 retail stores under the Walgreens and Duane Reade brands in the United States; and six specialty pharmacies.
The Retail Pharmacy International segment sells prescription drugs and health and wellness, beauty, personal care and other consumer products through its pharmacy-led health and beauty stores and optical practices, as well as online and an integrated mobile application. This segment operated 4,428 retail stores under the Boots, Benavides and Ahumada in the United Kingdom, Thailand, Norway, the Netherlands, Mexico and elsewhere, and 550 optical practices, including 165 on a franchise basis.
The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home health care supplies and equipment, as well as provides related services to pharmacies and other health care providers.
Investors receive a 5.32% dividend. Walgreens Boots Alliance stock has a $46 target price at Deutsche Bank. The consensus target was last seen at $40.51, and shares ended Tuesday trading at $36.341 apiece.
With a recession likely on the way, consumers running out of savings and the trajectory for the economy possibly the worst it has been since the financial crisis in 2007 and 2008, it makes sense to move to health care, as it remains resilient and likely will outperform the rest of the year and perhaps beyond.
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