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Pfizer and High Yielding Healthcare

With a 5.6% dividend yield, Pfizer is currently the highest yielding stock in the Dow Jones Industrial Average 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:

Data provided by Reuters

Both Pfizer and Bristol Myers 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.

Symbol
Price
 
Change
%Change
DJIA
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BMY
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PFE
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LLY
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