If you want to play this topsy-turvy market without potentially losing your shirt, I suggest choosing high-yielding blue-chip companies. These stocks can potentially make a profit — no matter which way the market turns.
Pharmaceutical manufacturer Bristol-Myers Squibb (NYSE:BMY) is one such stable, high-yielding stock.
With an annual forward dividend of about 4%, the stock also has a strongly bullish chart and appears fundamentally stable.
Although Big Pharma has taken a beating in recent years, Bristol-Myers has managed to set itself apart from the competition through impressive sales. Focussed on creating drugs for serious physical and mental health diseases, the company also has a number of promising treatments in its pipeline, including a potential blockbuster blood thinner, Eliquis, which analysts estimate could bring in as much as $3 billion in future revenue.
From a technical outlook, the stock appears to be on a tear, nearing doubling in price over the last two years.
Moving from a low of $17 in June 2009, BMY has risen to four new consecutive 52-week highs and is currently trading around $32.50.
Forming a major uptrend off its June 2009 $20.93 low, the stock bullishly broke through $26.75 support in March 2011, completing a large ascending triangle pattern in the process.
Consolidating between $26.75 support and $30 resistance for much of the spring, in early August the stock briefly dipped below support before rebounding and forming an accelerated uptrend line.
This September, BMY bullishly broke above $30 resistance, completing a second ascending triangle.
For the past four weeks, shares have hit four new consecutive highs, and with no historical resistance is in sight, they could rise much further.
The stock’s bullish tehnical outlook is reinforced by solid fundamentals.
Second-quarter revenue increased 14% to $5.4 billion, with strong European and U.S. drug sales driving growth.
With new pipeline products being approved, BMY raised its guidance for 2011. Analysts now expect revenue to increase 8.5% from last year to $21.1 billion.
The earnings outlook is equally robust. Bristol Myers expects its strong drug pipeline to bring earnings per share into the range of $2.20-$2.30, a 7% gain from last year.
In addition to a solid growth outlook, the company’s 4% yield is very stable. With this type of yield, an investor can simply hold the stock and collect dividend cheques for years to come.
At the time of writing, Deborah O’Malley did not hold a position in any of the stocks mentioned in this article.