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.
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
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