Dividend Yield: 3.4%
This week, Novartis received the kind of headline that typifies the risks facing drugmakers — news broke that a patient taking the company’s multiple sclerosis pill Gilenya developed a rare and possibly fatal disease.
As Reuters reported, Deutsche Bank analyst Tim Race expressed that the case is a bit of a red flag for the drug’s future growth — especially in the face of increasing competition in the space. Luckily for NVS, investors don’t seem to care — maybe because Novartis is keeping them happy with a hefty annual cash payout.
Novartis has issued dividends for more than two decades, and its payout has increased more than threefold during the past 10 years alone. Right now, its $2.43 per share dividend, paid annually, is good for a solid 3.4% yield — the cherry on top of decent year-to-date share appreciation.
Also, NVS is currently slated to make $5.37 per share next year, giving it a payout ratio of 45% — higher than the S&P 500’s average, but still much more sustainable than other healthcare names like GlaxoSmithKline (GSK) and Merck (MRK). And the company has a decent war chest of $6 billion in cash and short-term investments that should help keep the payouts coming.