Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Why You Shouldn’t Get Excited About Gold Price Mini-Rally - 26th Jan 21
The Truth About Personal Savings Everybody Should Know and Think About - 26th Jan 21
4 Economic Challenges for 2021 - 26th Jan 21
Scan Computers 2021 "Awaiting Picking" - 5950x RTX 3080 Custom PC Build Stock Status - 26th Jan 21
The End of the World History Stock Market Chart : Big Pattern = Big Move - 26th Jan 21
Stock Market Recent Sector Triggers Suggest Stocks May Enter Rally Phase - 26th Jan 21
3 Top-Performing Tech Stocks for 2021 - 26th Jan 21
5 Tips to Manage Your Debt - 26th Jan 21
Stock Market Intermediate Trend Intact - 25th Jan 21
Precious Metals Could Decline Before their Next Attempt to Rally - 25th Jan 21
Great Ways of Choosing Good CMMS Software for a Business - 25th Jan 21
The Dark Forces behind American Insurrectionists - 25th Jan 21
Economic Stimulus Doesn’t Always Stimulate – Pushing On A String - 25th Jan 21
Can Karcher K7 Pressure Washer Clean a Weed Infested Driveway? Extreme Power Test - 25th Jan 21
Lockdown Sea Shanty Craze - "Drunken Sailor" on the Pirate Falls Crazy Boat Ride - 25th Jan 21
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

It's Not Too Late to Buy into the Pharma Stock Powerful Uptrend

Companies / Healthcare Sector Jul 15, 2012 - 11:11 AM GMT

By: DailyWealth

Companies

Best Financial Markets Analysis ArticleBrett Eversole writes: Drug stocks have been on a tear this year.

Pharmaceutical giant Abbott Labs is up 18%. Smaller names like Questcor and Auxilium are up 38% and 35%, respectively.

The sector overall – as measured by the PowerShares Dynamic Pharmaceuticals fund (PJP) – is up 19% so far in 2012... more than double the S&P 500's 9% return.



Most investors get scared when they hear about powerful moves like this. They're more likely to sell than buy because they assume the sector is expensive. But that isn't the case today...

Now is not the time to sell. Big Pharma is one of the strongest uptrends around. These stocks are still cheap, and as a whole, the sector is paying close to its highest dividend ever.

Now is the time to buy into the pharma uptrend. Let me explain...

Big-name drug stocks are paying market-beating cash dividends.

We've only seen dividend yields this high a few times in the past 30 years. Take a look...



Excluding the 2009 crash, the last time we saw dividends this high was 1994. Back then, the peak in yields launched the pharmaceutical sector into a massive seven-year bull market. Pharma stocks increased more than 500% and reached an all-time high in 2000.

You see, 20 years ago, investors sought out cash-paying investments. As investors bought dividend-paying drug stocks, they drove the share prices up. The same trend is happening today.

Thanks to their high dividends in 1994, triple-digit gains were standard for big-name drug stocks. Back then, Johnson & Johnson paid out 2.9%, even less than today. That started an incredible run in J&J's stock. The company increased over 450% into its 2000 peak.

The same thing happened with Pfizer. In 1994, the company paid a 3.5% dividend... and rocketed 850%. Merck paid a 3.8% dividend... and rose 500%. And so on...

Today, the pharmaceutical sector pays a 3.3% dividend yield... That's 50%-plus over the S&P 500's 2.1% yield. And some of the top names pay even larger yields...

These are incredible dividends in a world where 10-year Treasuries only pay 1.6%. And historically, many of these companies are at or near all-time-high dividend yields.

Of course, the "Johnson & Johnsons" of today are very different than they were in 1994. These drug companies will grow slower than they did 20 years ago. So we shouldn't expect thousands of percent returns.

But right now, these companies are thriving. They're paying huge – and often growing – dividends to their shareholders. And based on dividends, drugs stocks are a better deal today than they were nearly three decades ago.

With 10-year Treasuries paying less than 2%, drug companies pay nearly twice the cash income. That wasn't true in 1994, when interest rates were much higher than they are today. Investors didn't consider J&J's 3% dividend as "competitive" with the double-digit rates you could have earned by buying government bonds or even a CD!

Right now, the dividend yields on these stocks – relative to other investments – is simply too high for cash-seeking investors to ignore. I expect their appetites for income will fuel the tailwind driving drugs stocks higher.

If you don't already own pharma, consider some of the names listed above. Or you can easily buy a basket of these companies with the PowerShares Dynamic Pharmaceuticals Fund (PJP).

Yes, these companies are up big in 2012. But now is not the time to sell. They're still cheap, and they still pay hefty dividends. We want to be onboard this long-term trend.

Good investing,

Brett Eversole

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2011 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules