High-Yield Healthcare Stocks: A Closer Look
Income investors often overlook the healthcare sector in their search for high dividend yields. However, some healthcare stocks offer attractive yields, making them worth considering. In this article, we’ll examine two ultra-high-yield healthcare stocks: one to buy and one to avoid.
A Smart Pick: Pfizer
Pfizer’s share price has taken a hit recently, plummeting over 50% from its peak in late 2021. Despite this, the company’s forward dividend yield of 5.66% makes it an attractive option for income investors. Pfizer prioritizes maintaining and growing its dividend, and its future prospects look brighter than they initially seem.
The company has returned to year-over-year revenue growth, and management expects solid growth in the second half of the decade thanks to new products on the market. Pfizer’s pipeline also includes promising experimental drugs, such as danuglipron for obesity and several cancer therapies.
With a valuation of 10.5 times forward earnings, Pfizer is an attractive buy for investors seeking income and growth potential.
A Stock to Avoid: Walgreens Boots Alliance
Walgreens’ forward dividend yield of over 9% may tempt income investors, but the company’s problems make it a stock to avoid. Walgreens’ shares have plunged nearly 80% below their three-year high, and the company has lost over half of its market cap in 2024 alone.
The pharmacy retailer’s financials are headed in the wrong direction, with adjusted earnings per share dropping 40.8% year over year in its latest quarter. CEO Tim Wentworth has hinted at a potential dividend cut, which could leave income investors feeling uneasy.
While aggressive investors may see Walgreens as a turnaround play, others should exercise caution and consider alternative options.
Key Takeaways
When searching for high-yield healthcare stocks, it’s essential to look beyond the surface level. Pfizer’s attractive dividend yield, growth prospects, and valuation make it a smart pick for income investors. On the other hand, Walgreens’ struggles and potential dividend cut make it a stock to avoid.
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