Stocks that sport unusually high dividend yields compared to their peers often do so because an underlying problem with their business has cut into their value. Still, high yielders can, on occasion, represent fantastic bargains for risk-tolerant investors.

Big pharma stocks AstraZeneca (NYSE:AZN), GlaxoSmithKline (NYSE:GSK), and Teva Pharmaceutical Industries (NYSE:TEVA), for example, have all fallen on hard times. However, at each of these companies, management has shown a steadfast commitment to paying a top-notch dividend while they steer through their various headwinds. Given that, let's take a look at why they might be worthwhile buys for investors on the hunt for above-average yields. 

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AstraZeneca is aiming for the stars with its immuno-oncology pipeline

AstraZeneca has forecast a compound annual growth rate (CAGR) for its sales of 10.8% over the next six years, which it expects to be fueled by its growing footprint in immuno-oncology and its fairly strong diabetes franchise. If that line holds, AstraZeneca would be one of the fastest growing biopharmas in the world. 

However, Wall Street isn't as nearly as optimistic. EvaluatePharma's forecast, for example, has the drugmaker's top-line growth pegged at 5% per year over the next seven years, presumably because of the increasingly competitive landscape in immuno-oncology. 

The big question mark is the degree to which AstraZeneca will be able to capture market share in non-small cell lung cancer (NSCLC) treatment with its immuno-oncology medicine, Imfinzi. At present, NSCLC is dominated by Merck's Keytruda, and to a lesser degree, by Bristol-Myers Squibb's Opdivo. However, Imfinzi's late-stage trial of Imfinzi, dubbed "Mystic," is expected to produce top-line results any day now. A strong showing could allow the drug to leapfrog both Keytruda and Opdivo. 

On the flip side, a failure in this pivotal study could send Astra's shares into a tailspin. The drugmaker's growth story is largely built around the premise that Imfinzi will become a key therapy in the immuno-oncology space, and the company's new flagship medicine.

AstraZeneca's growth prospects are important to income investors because the company's sky-high yield of 5.5% may not be sustainable unless Imfinzi turns into a mega-blockbuster. The drugmaker's 12-month trailing payout ratio, after all, presently stands at noteworthy 104.8%. But that payout ratio should drop markedly into a more comfortable range if Imfinzi leaves up to expectations.  

GlaxoSmithKline is banking on its dominance in the vaccine space

By 2023, GlaxoSmithKline is forecast to become the world's largest vaccine-maker, thanks to its meningitis B shot Bexsero and its forthcoming shingles vaccine, Shingrix. Both of these products are expected to generate sales in excess of $1 billion annually as early as 2022. As an added bonus, this top British drugmaker should also start to report the results of the candidates in its early-stage immuno-oncology pipeline by the time its vaccine franchise is starting to reach its peak commercial potential. 

The downside is that Glaxo's respiratory and HIV franchises -- which are key to its near-term growth prospects -- are presently in limbo to a degree. Pricing pressures in the U.S. still hang over the drugmaker's Ellipta suite of drugs (Anoro, Breo, Incruse), and Gilead Sciences hopes to halt its recent market share gains in HIV treatment with its upcoming fixed-dose combo of bictegravir and emtricitabine/tenofovir alafenamide. That's not to say these risks will result in a worst case scenario for GlaxoSmithKline, but they are significant enough that investors need to bear them in mind. 

Despite this mixed growth outlook, Glaxo's management has reaffirmed their commitment to maintain its dividend payout, which currently yields 4.51%, putting it among the most generous big pharmas.

Now, the drugmaker will need to avoid any major setbacks with either its respiratory or HIV franchises to keep this promise in light of its payout ratio of 225%, and the growing possibility of additional asset swaps/acquisitions moving forward. But Glaxo does appear to place a premium on its dividend program based on its recent history. 

Teva's passing through the eye the storm with its juicy dividend still intact

Branded and generic drugmaker Teva Pharmaceutical Industries has lost a third of its value over the past twelve months due to a slew of headwinds. The net result is that Teva now sports a sky-high yield of 4.14% -- near the top of its peer group -- and its shares are arguably dirt cheap based on their forward price-to-earnings ratio of 7.  

Is Teva setting up for a rebound? As it starts to improve its fundamental outlook by paying down the mountain of debt it took on to acquire Actavis' generic drug portfolio, and moves past the $519 million settlement deal it made with the U.S. Department of Justice regarding charges the drugmaker systematically bribed foreign officials to boost its profits, Teva should be in a fairly strong position to create value for its shareholders moving forward. The Actavis acquisition, after all, transformed Teva into the largest generic drugmaker in the world, so the company ought to be able to better handle the ongoing price erosion within that segment due to its increased pricing power with third-party payers.

Of course, the elephant in the profitability room is the generic threat to Teva's all-important multiple sclerosis medicine, Copaxone, and that's a problem that doesn't have an easy solution. In fact, Wall Street analysts expect Teva's top line to drop by 1.7% next year largely as a result of this single factor. 

All told, Teva seems to be headed in the right direction -- it's working to lower its debt load, and increasing its operational efficiency to improve both profitability and free cash flows. So while there may be some bumps in the road due to opaxone's loss of exclusivity -- and the drugmaker's current payout ratio of 6,800% is certainly something that should concern income investors -- the worst of Teva's problems appear to be behind it. Thanks to its Actavis purchase, it appears to have enough firepower in its treatment portfolio to push past all of these headwinds and return to respectable levels of growth soon.

 

George Budwell has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool recommends Teva Pharmaceutical Industries. The Motley Fool has a disclosure policy.