Healthcare Sector Ideas

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AstraZeneca - >>> 2 Top Dividend Stocks You Can Buy for Less Than $100 Per Share


Motley Fool

By Prosper Junior Bakiny

Mar 10, 2022


https://www.fool.com/investing/2022/03/10/2-top-dividend-stocks-you-can-buy-for-less-than-10/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


AstraZeneca's recent acquisition helped bolster its lineup as well as its pipeline.

Bristol-Myers' newer products should help it drive top-line growth through the end of the decade.

Some cheap stocks are worth investing in.

While the market can sometimes bid up shares of excellent companies to sky-high prices, it isn't always necessary to break the bank to invest in quality businesses. It is possible to find great companies in the market whose shares trade for less than $100 apiece. Investing on a budget can be highly profitable, after all.

Let's look at two pharmaceutical giants that fit the bill: AstraZeneca ( AZN 2.76% ) and Bristol-Myers Squibb ( BMY 1.24% ). In addition to their robust businesses, both of these drugmakers are excellent options for income-seeking investors.

1. AstraZeneca: $56.50 per share

In the past 12 months, several developments have helped AstraZeneca ensure a bright future. First, the company earned regulatory approval for asthma medicine Tezspire. AstraZeneca developed this therapy in collaboration with Amgen.

While there are plenty of asthma treatments out there, the two partners hope that Tezspire will be highly successful on the market since many existing therapies are inadequate for many asthma patients. AstraZeneca and Amgen will equally share the profits and costs associated with this medicine.

Second, AstraZeneca acquired Alexion Pharmaceuticals in a cash-and-stock transaction valued at $39 billion; the deal closed in July. Alexion focuses on developing treatments for rare diseases.

Alexion boasts two successful medicines in its lineup: Soliris and Ultomiris. These therapies are the only ones approved for paroxysmal nocturnal hemoglobinuria and hemolytic uremic syndrome, both of which are rare blood disorders. Alexion also has a deep pipeline, which AstraZeneca inherited. It includes over a dozen ongoing programs.

AstraZeneca's lineup continues to perform well. In 2021, the company's oncology division saw its sales increase by 19% year over year to $13.7 billion. Meanwhile, sales of its cardiovascular, renal, and metabolism products clocked in at roughly $8 billion, 13% higher than the previous fiscal year. The company's total revenue increased by 41% compared to 2020 and came in at $37.4 billion.

This figure includes sales of AstraZeneca's COVID-19 vaccine, not to mention the new products it got its hands on thanks to the acquisition of Alexion Pharmaceuticals. The company's performance this year will be more indicative of its future, and AstraZeneca's management expects revenue to grow by a high teens percentage in 2022.

That would be an excellent showing for a pharmaceutical company of this size. The drugmaker's business looks robust. It also has a rich pipeline, including a promising intranasal formulation of its COVID-19 vaccine. AstraZeneca currently offers a dividend yield of 2.54%, higher than the S&P 500's yield of 1.43%.

And while the company's cash payout ratio looks way too high at 102%, management prioritizes dividends and is counting on its cash flow generation to cover future payments (and increases). A solid lineup, coupled with a promising pipeline and a management team that prioritizes rewarding shareholders through dividends, make AstraZeneca an excellent target for dividend-seeking investors.


2. Bristol-Myers Squibb: $68.77 per share

In 2021, Bristol-Myers had no fewer than eight products that generated more than $1 billion in sales. Some of the best-performing of the bunch were anticoagulant Eliquis, whose revenue for the company increased by 17% year over year to $10.8 billion. Bristol-Myers' cancer medicine Opdivo saw its sales increase by 8% year over year to $7.5 billion. Sales of Yervoy, another cancer therapy, jumped by 20% year over year to roughly $2 billion.

Bristol-Myers' total revenue for the year increased by 9% to $46.4 billion. The future also looks bright for this drugmaker. Bristol-Myers boasts dozens of ongoing clinical trials. While many of them are for existing products seeking label expansions, the company also has new products it aims to launch on the market.

The company thinks its lineup of newer products will generate between $10 billion and $13 billion in revenue through 2025. During the second half of the decade, the company estimates significant additional revenue from these products, too.

One promising product in this lineup is mavacamten, a potential therapy for a heart condition known as symptomatic obstructive hypertrophic cardiomyopathy. It could earn approval from the U.S. Food and Drug Administration within the next couple of months.

Although Bristol-Myers will face patent cliffs for some of its top-selling products soon, the company's new portfolio will help it deal with the loss in sales from older medicines. Bristol Myers' dividend yield of 2.92% is well above the average for the S&P 500, and the company boasts a conservative cash payout ratio of 29%.

And with the company having raised its dividends by 38% in the past five years, expect it to continue doing so in the future. Bristol-Myers looks like a solid dividend stock to buy and hold for a while.

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