2 Health Care Stocks Continue Rising Dividends with Yields Above Sector Averages
By: Ned Piplovic,
Regardless of the U.S. government’s official health care policies and legislative proposals, these two health care companies have been delivering rising dividends and long-term asset appreciation for decades.
The two stocks currently pay dividends with 2%-plus yields, which are significantly higher than the average 0.76% dividend yield in the health care sector. Their current share prices are within 3% of where they were trading during June 2016 but they have zoomed 57% and 150%, respectively, during the past five years.
Medtronic PLC (NYSE:MDT) has been paying raising dividend for almost four decades. In addition, Medtronic has its ex-dividend coming shortly in July 5, 2017, with a July 26, 2017, pay date and Pfizer Inc. (NYSE:PFE) has it ex-dividend date on August 2, 2017, with an early September pay date.
Medtronic PLC (NYSE:MDT)
Founded in 1949 and headquartered in Dublin, Ireland, Medtronic manufactures and sells device-based medical therapies worldwide. The company operates through four distinctive segments, the Cardiac and Vascular Group, the Minimally Invasive Therapies Group, the Restorative Therapies Group and the Diabetes Group. Through these four segments, Medtronic develops, manufactures and distributes pacemakers, defibrillators, cardiac resynchronization therapy devices, diagnostics devices, surgical instruments, sutures, electro-surgery products, bone graft substitutes, drug delivery systems, insulin pumps and consumables. It also provides continuous glucose monitoring systems, web-based therapy management software solutions and many other health care products. The company has 260 locations globally to support its operations in 155 countries.
Medtronic’s share price dropped almost 20% in the last six months of 2016 but it reversed course in January 2017 to recover all of its losses by June 5, 2017. Since then, the share price continued its rise and currently is trading 2.6% higher than the price from one year ago. Over the past five years, the share price rose 150%.
The current quarter’s dividend distribution of $0.46 is 7% higher than last quarter’s $0.43 dividend. This current quarterly amount converts to a $1.84 annual payout and a 2.1% yield. The current dividend hike is only the latest annual dividend boost in Medtronic’s long history of paying rising dividends. Since the company started paying a dividend in 1977, it has offered a rising dividend for 39 consecutive years. Just over the past two decades, Medtronic has raised its annual payout at an average rate of 16% every year and, as a result, increased its annual dividend amount more than 19-fold.
Pfizer, Inc. (NYSE:PFE)
Founded in 1849 and headquartered in New York City, Pfizer Inc. develops, manufactures and sells health care products worldwide. It operates through two segments, Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). The IH segment focuses on the development and commercialization of medicines and vaccines and consumer health care products in various therapeutic areas, such as internal medicine, oncology, immunology and rare diseases.
Additionally, PFE manufactures consumer health care products for dietary supplements, pain management, gastrointestinal, respiratory and personal care. The EH segment offers products that will lose or have lost patent protection, branded generic products, sterile injectable products, biosimilars and infusion systems. Pfizer’s portfolio includes products under the Prevnar 13, Lyrica, Lipitor, Viagra, Advil and Centrum brands.
Between late June and the end of October 2016, the share price fell more than 14% to reach its 52-week low of $29.83. The price has been rising relatively steadily since November 2016. While the share price is still 2.9% below its level from late-June 2016, it continues to rise. After dropping for the last six weeks and getting close to falling below the 200-day moving average (MA) in a bearish manner, the 50-day MA reversed direction and is slowly rising again. This could be an indication that the uptrend could continue in the short term.
The current quarterly dividend of $0.32 is equivalent to a $1.28 annual distribution and a 3.8% dividend yield, which is 11.5% above the company’s 3.4% five-year average yield. Over the past two decades, Pfizer cut its annual dividends twice – in 2009 and 2010. However, since resuming its annual dividend hikes in 2011, the company increased its yearly distribution at an average rate of 8.6% for the past seven consecutive years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.