6 Dividend-Paying Health Care Stocks to Buy Amid COVID-19 Rebound

By: ,

Large-Cap Health Care Stocks

Six dividend-paying health care stocks to buy during the ongoing recovery from the COVID-19 pandemic feature companies that focus on helping patients and providing them with prescription drugs that are developed to alleviate serious ailments and diseases.

The six dividend-paying health care stocks to buy should rise past weakened economic activity in states throughout the country where their governors imposed restrictions starting in March when the number of COVID-19 cases and deaths spread shockingly. These six dividend-paying health care stocks to buy stand out for their potential in an industry that has taken on increased importance as the effects of the novel coronavirus worsened.

The fallout of COVID-19 has included 10,815,117 cases and 519,575 deaths worldwide, along with 2,732,639 cases and 128,677 lives lost in the United States, as of July 2. America has more than double as many cases and deaths of any other country, including China, where COVID-19 originated. Plus, a one-day spike in cases occurred in Florida, Georgia, Idaho, Tennessee and Utah on June 26, following recent public protests, “non-essential” businesses reopening and the return of banned activities in which some people opted not to use protective masks and social distance, as recommended by U.S. public health experts.


6 Dividend-Paying Health Care Stocks to Buy Feature Bristol Myers

Bob Carlson, head of the Retirement Watch advisory service and chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, said he liked the outlook of Bristol-Myers Squibb Co. (NYSE:BMY). The pharmaceutical developer and manufacturer had endured some problems recently that included patent losses and huge debt to buy Celgene that hurt its stock price and left it valued at a substantial discount, he added.

But BMY has a high dividend yield of around 3.03% that appears safe, even after the debt payments due to its Celgene deal, Carlson continued. In fact, S&P maintained the company’s A+ debt rating.

Chart courtesy of www.StockCharts.com


“The company is selling other assets and reducing expenses to increase cash flow,” Carlson said. “BMY made deleveraging and improving its balance sheet a priority.”

Bristol-Myers also has a history of managing mergers and acquisitions well, so it is likely to achieve the cost savings it projects from the Celgene deal, Carlson predicted. BMY further has a good portfolio of profitable drugs and a solid pipeline of others on the way he added.

Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz during an interview before social distancing became the norm after the outbreak of COVID-19.

Bristol-Myers Squibb has at least preserved its dividend for more than 35 years and boosted it each of the last 13 years, Carlson said. Thus, it is a stock that income investors should appreciate.

The “main risk” in buying Bristol-Myers Squibb today is whether it will execute its merger plan well or remain burdened with debt from the Celgene deal, Carlson told me. The risk has a low probability of occurring, given the company’s successful track record with executing mergers, he added.

AstraZeneca Is Another of the 6 Dividend-Paying Health Care Stocks to Buy

Bryan Perry, who leads the Cash Machine, Premium Income, Quick Income Trader, Hi-Tech Trader and Breakout Profits Alert advisory services, told me he favors AstraZeneca plc (NYSE:AZN) and Johnson & Johnson (NYSE:JNJ).

“In looking at the leading candidates to bring a COVID-19 vaccine to market, AstraZeneca’s experimental COVID-19 vaccine is probably the world’s front-runner and most advanced in terms of development, the World Health Organization’s (WHO) chief scientist said,” Perry told me. “The British drug maker has already begun large-scale, mid-stage human trials of the vaccine.”

AstraZeneca also announced that it signed supply chain agreements with Brazil’s Fundação Osvaldo Cruz, also known as Fiocruz, the nation’s top public health organization, for the capacity to produce 2 billion doses of its potential coronavirus vaccine, known as AZD1222, which was developed by researchers at University of Oxford, Perry continued. Plus, AZN offers a dividend yield of 2.57%.

A potential vaccine for COVID-19 gains efficacy with a second dose, according to reports. In addition, the AstraZeneca partnership with Moderna (NASDAQ:MRNA) has begun talks with Daiichi Sankyo about supplying the promising novel coronavirus vaccine in Japan.

Chart courtesy of www.StockCharts.com

Johnson & Johnson Joins 6 Dividend-Paying Health Care Stocks to Buy

A major reason Perry said he likes Johnson & Johnson is that its COVID-19 vaccine candidate is a frontrunner in the race for a treatment or a cure. Through its Janssen Pharmaceutical Companies, JNJ has accelerated the initiation of the Phase 1/2a first-in-human clinical trial of its investigational SARS-CoV-2 vaccine, Ad26.COV2-S, recombinant.

Initially scheduled to begin in September, the trial is now expected to start in the second half of July. JNJ also is in discussions with the National Institutes of Allergy and Infectious Diseases about initiating the Phase 3 clinical trial ahead of its original schedule, pending the outcome of the Phase 1 studies and approval of regulators.

Chart courtesy of www.StockCharts.com

Another encouraging development is that the United Kingdom is in advanced talks to reserve or buy doses of JNJ’s COVID-19 vaccine. The European Union reportedly has authorized use of an emergency fund of $2.3 billion to reach agreements with up to six COVID-19 vaccine manufacturers. JNJ also offers a current dividend yield of 2.88%.

Paul Dykewicz interviews Bryan Perry at the MoneyShow in Orlando, Florida.

Walgreens is 1 of 6 Dividend-Paying Health Care Stocks to Consider Buying

Mark Skousen, PhD, likes to recommend dividend stocks and one that has the potential to come back from a slide is Walgreens Boots Alliance (NYSE:WBA). The company is a retail and wholesale pharmacy that owns and operates Walgreens and Duane Reade stores in the United States, Boots stores in Europe and Asia, as well as others.

Walgreens has endured a drop of about 30% in its share price since the start of the year in falling from $59 to its current $41.98, as of June 2. However, Walgreens pays a current dividend yield of 4.48% and is a top undervalued stock that possesses great potential to recover, especially if its ongoing cost-cutting effort pays off.

Chart courtesy of www.StockCharts.com

Skousen, whose flagship investment service is his Forecasts & Strategies investment newsletter, has a five-stock portfolio of dividend-paying companies such as Walgreens, which could be considered a comeback candidate for income investors who can afford to be patient while they collect its dividends.

Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz in Philadelphia. Skousen’s premium investment services consist of Home Run Trader, Five Star Trader, TNT Trader and Fast Money Alert.

“The drugstores were an essential retail channel and so never really shut down in the quarantines,” said Hilary Kramer, host of a national radio program called “Millionaire Maker.”

Columnist and author Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services included 2-Day TraderIPO Edge, Turbo Trader, High Octane Trader and Inner Circle.

But after weathering the worst, the pharmacy services stocks look oversold as the underlying businesses ramp back up, opined Kramer, who also leads the Value Authority and GameChangers advisory services. Investors who already own shares in those stocks should keep them, she advised.

Bank of America Prefers CVS as 1 of the 6 Dividend-Paying Health Care Stocks to Buy

Bank of America gave CVS Health Corp. (NYSE:CVS) a price objective of $80, roughly 23% above the pharmacy services company’s closing price on Thursday, July 2. Bank of America’s price target is based on roughly 10.5x its 2020 earnings per share (EPS) estimate.

“This multiple is below the five-year average on an absolute basis and at the lower end of the historical range of 11.0x-17.5x,” according to a recent research note from Bank of America. “This also represents a bigger discount to the S&P 500 vs. the last five years. The discount reflects margin pressure across CVS’s core Pharmacy Services and Retail Pharmacy segments and uncertainty around drug prices.”

Downside “risks” to CVS achieving that price level include the possibility of Amazon (NASDAQ:AMZN) or another disruptive force entering the supply chain, failure to generate expected synergies from its Aetna transaction, any regulatory issues related to post-closing activities of that deal, growing competitive risks in the pharmacy benefit market — including competitive pricing around rebates and ongoing operational challenges. Other risks include the highly competitive long-term care pharmacy business, business disruption tied to the COVID-19 outbreak and slowing prescription/insurance trends, according to Bank of America.

Possible catalysts to lift CVS are a potential prescription volume pickup, faster-and-stronger-than-expected synergies from Aetna and improving front-end performance, Bank of America added. CVS also offers a dividend yield of 3.10%.

Chart courtesy of www.StockCharts.com

Cigna Makes List of 6 Dividend-Paying Health Care Stocks to Buy

The investment bank also recommended health insurance company Cigna Corp. (NYSE:CI), with a price objective of $242, based on 13.4x a 2020 earnings per share estimate (EPS). That estimate is below the stock’s five-year average price-to-earnings (P/E) ratio, which is a “conservative multiple” and seems justified to reflect some level of recessionary risk. Nonetheless, challenges that could slow Cigna are deal integration risks, issues in the disability and life business, higher-than-expected costs and the potential impact of future regulatory changes.

Even with Cigna’s share price closing at $190.49 on July 2, it would rise more than 25% to reach the investment bank’s price objective for the stock. The Bernstein investment firm hiked its target on Cigna to $223 on May 4, but also downgraded the shares to “market perform” from “outperform” due to business risks from the coronavirus and the ongoing recession.

Chart courtesy of www.StockCharts.com

Cigna’s management issued a statement on April 30 cautioning that “uncertainty” about the effects of COVID-19 may cause a “wider disparity” in analysts’ consensus estimates than usual. The company’s management has offered guidance for full-year 2020 of revenues reaching $154-$156 billion and adjusted income from operations of $18-$18.60 per share for this year and $20-21 per share for 2021. A drawback for income investors is that Cigna’s dividend yield currently is just 0.02%.

Stocks achieved a remarkable recovery in the second quarter ended June 30 after a COVID-19-related market crash in March of first-quarter 2020. In fact, Q2 marked the best-performing quarter for the market since 1998 and the best second quarter on record, with the S&P 500 jumping nearly 20%, while the Dow Jones Industrial Average and the NASDAQ Composite climbed 17.5% and 30%, respectively.

These six dividend-paying health care stocks to buy provide investors with a chance to profit from the COVID-19 recovery as non-essential businesses reopen and begin to recall many of their employees who had been laid off during amid the recent lockdowns. Investors can take heart from the U.S. unemployment rate dipping to 11.1% as the economy added 4.8 million jobs in June, the Bureau of Labor Statistics announced on July 2. That data far exceeded the predictions of many economists.

Paul Dykewicz

Connect with Paul Dykewicz

Paul Dykewicz

Paul Dykewicz, www.pauldykewicz.com, is a respected, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Crain Communications, Seeking Alpha, Guru Focus and other publications and websites. Paul can be followed on Twitter @PaulDykewicz, and is the editor and a columnist at StockInvestor.com and DividendInvestor.com. He also serves as editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free weekly e-letters and other investment reports.

Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. In addition, Paul serves as a commentator about investing, economics, business news, politics and motivational guidance. 

Paul earned a master’s degree in business administration with a focus on finance at Baltimore’s Johns Hopkins University, where he was elected to two terms as president of its Finance Club. He earlier received a master’s degree from Michigan State University’s School of Journalism, where he was inducted into the Kappa Tau Alpha honor society. Paul received a bachelor’s degree from the University of Michigan in Ann Arbor, focusing on political science, business and economics.

Search Dividend Investor