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Yield Chasers Look to Pharmaceutical Stocks

With Treasury rates at record lows, investors are looking to high yielding, but slow growing pharmaceutical stocks, for more return.

Source: Tylenol

The average dividend yield of the six largest pharmaceuticals firms is 4.15 percent; almost 2 percent above the average dividend yield of stocks in the S&P 500 , according to Jeremy Schwartz, Director of Research at WisdomTree Asset Management.

That’s also well above the 1.5 percent the 10-year Treasury is now yielding.

Schwartz also points out that Johnson & Johnson , Pfizer , Merck , Abbott Laboratories , Eli Lilly and Bristol-Myers Scquibb paid in aggregate of $26 billion of dividends, the second highest amount of any individual industry — only passed by $28 billion in oil and energy stocks.

While shares of Johnson & Johnson are down 5.6 percent over the last year, several analysts say Johnson & Johnson is a good stock pick when the markets are volatile — as it has a diversified portfolio with recession resistant products including Tylenol and Band-Aid.

CNBC’s Jim Cramer on Friday’s “Mad Money” said that “In this awful environment, Johnson & Johnson is the kind of stock you can circle the wagons around.”

-By CNBC's Seema Mody

Questions? Comments? Email us at marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

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