Powerful Buy Signals for Amgen and Boeing

For a select group of companies, there's a powerful buy signal that can lead to market beating returns over the long haul.

May 5, 2014 at 12:43PM

Earnings can be manipulated somewhat, but dividends are real. Companies that can afford to pay a dividend and increase it on an annual basis typically have sustainable business models, efficient operations, and effective, shareholder-friendly management.

Some companies are willing to go the extra mile by implementing enormous dividend increases. Huge dividend boosts can be a powerful buy signal, representing confidence from management that the company's future is bright. These buy signals can lead to big capital gains and significant income.

Two companies with compelling buy signals
(NASDAQ:AMGN) is one of the world's largest and most successful biotechnology companies. Amgen has six blockbusters, including Neulasta and Neupogen, which boost white-blood-cell production, and arthritis drug Enbrel. These products combined for $10 billion in sales in 2013 and are the backbone of Amgen.

As a result of Amgen's blockbusters, its financial results have been excellent. Since 2000, its annual revenue has climbed from $3.2 billion to $18.7 billion, and its net income has risen from $1.1 billion to $5.1 billion.

Amgen's financial success has allowed it to be one of the few biotech companies to reward its shareholders with a dividend. In fact, Amgen recently increased its dividend by 30%, which boosted its yield to 2.1%.

I believe this huge dividend boost is a buy signal demonstrating management's confidence that it will develop many more blockbusters in the future. This confidence is backed up by decades of experience in developing life-changing medications such as Xgeva and Prolia, which treat bone metastases. Xvega and Prolia were launched in 2010 and already have a combined $1.8 billion in annual sales. 

Further, Amgen's rock-solid pipeline consists of eight high-potential drug candidates in phase 3 trials, in addition to dozens in earlier phases. An approval is expected later this year for Evolocumab, which will combat cardiovascular disease. Its pipeline includes a large number of drug candidates to treat cancer, including Rilotumumab for the treatment of gastric cancer and Trebananib for the treatment of ovarian cancer.

Amgen is currently trading at an attractive price. Its P/E of 17 is much lower than that of its biotech peers, which trade at 40 times earnings on average.

Based on its extremely successful group of existing products, high-potential pipeline, nice dividend, and attractive price, I believe investors should take a close look at Amgen.

Boeing (NYSE:BA) is a global aerospace company that manufactures and sells commercial jetliners, private airplanes, and systems for the defense, aerospace, and security industries. Its most recent jetliner, the 777X, is expected to be the largest and most energy-efficient jet in history. The 777X will be an excellent follow-up to the Boeing 787 Dreamliner.

Boeing has an impressive dividend history that consists of 70 consecutive years of payouts. The company recently implemented a whopping 50% dividend increase, which boosted its dividend yield to 2.2%.

I believe this massive dividend increase was a buy signal conveying management's confidence that its impressive jetliner models will continue to provide record sales for the company. Based on its record backlog of $441 billion, this confidence is easily justified.

Going forward, Boeing is poised to benefit tremendously from the growth of air travel, which is projected to double within the U.S. over the next 20 years. Furthermore, air travel growth in developing markets should be even greater due to the need for infrastructure upgrades within these markets.

Given Boeing's positive earnings trend, long-term industry tailwinds, nice dividend, and tremendous backlog, I believe investors should take a close look at this stock.

The Foolish bottom line
In my opinion, the management of Amgen and Boeing would not implement these huge dividend increases without being quite confident in the future of their company. I believe these buy signals are a precursor to market beating returns over the long haul.

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Greg Williamson owns shares of Amgen, Celgene, and The Boeing Company and plans to buy more shares in each by the end of 2014.  The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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