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With a 5.6% dividend yield, Pfizer [PFE
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] is currently the highest yielding stock in the Dow Jones Industrial Average [.DJIA
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]and ranks 20th in yield on the S&P 500. As a point of comparison, 30 Yr treasuries and the Lehman Aggregate Bond Index are yielding about 4.5%. The Lehman Corporate Bond Index is yielding 5.55%. So is it the time to buy PFE?
Maybe in a volatile market like we have been experiencing, it is good to look for yields like Pfizer's. The healthcare sector is a traditional defensive play during an economic downturn. People still need to take their meds and a good dividend is a hedge against downward movement. In the 1990-91 recession, the S&P Healthcare Index gained 22%. During the 2001 recession, the index fell 1.3% but was the second best performing sector overall (only the S&P Materials index has a positive return).
Here are the top yielding stocks in the S&P Healthcare Index:
S&P 500 Healthcare Sector |
| Symbol | Company Name | % Yield | 3 Month % Chg | PE | Fwd Growth | PEG |
| PFE | Pfizer | 5.64 | -4.2 | 18.8 | 6.3 | 3.0 |
| BMY | Bristol Myers Squibb | 5.35 | -20.5 | 22.0 | 17.9 | 1.2 |
| LLY | Eli Lilly and Co | 3.69 | -4.5 | 18.7 | 10.2 | 1.8 |
| MRK | Merck & Co | 3.27 | -20.0 | 31.7 | 12.0 | 2.6 |
| WYE | Wyeth | 2.87 | -18.6 | 11.8 | 7.2 | 1.6 |
| JNJ | Johnson and Johnson | 2.64 | -6.4 | 17.5 | 5.9 | 3.0 |
| ABT | Abbott Labs | 2.32 | -2.3 | 24.8 | 11.5 | 2.2 |
| MYL | Mylan | 1.86 | -9.8 | 10.5 | -51.3 | -0.2 |
| COV | Covidien | 1.47 | 8.9 | -71.6 | 13.6 | -5.3 |
| BAX | Baxter Intl | 1.42 | 3.5 | 23.8 | 13.2 | 1.8 |
Data provided by Reuters
Both Pfizer and Bristol Myers [BMY
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]offer high yields. Both are trading at PEs below the sector average of 24. BMY has been beaten up a lot lately and the analysts are projecting good growth between this current fiscal year and the next year giving it a more attractive PEG. According to Thomson Financial, if you look at the analyst picks, BMY has 7 buys, 12 holds and no sells. PFE has 9 buys, 12 holds and 2 sells.
Looking at their charts, they both are trending downward. Pfizer's 200 day moving average turned south back in June of last year while BMY went downward in January.
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Data is a real-time snapshot *Data is delayed at least 15 minutes