Please ensure Javascript is enabled for purposes of website accessibility

3 Must-Own Dividend Stocks in This Chaotic Market

By George Budwell – Dec 6, 2021 at 7:15AM

Key Points

  • U.S. stock markets are going through a rough patch at the moment.
  • Dividend stocks can round out the edges in turbulent times.
  • The drugmakers Amgen, Bristol Myers Squibb, and GlaxoSmithKline are all top dividend plays right now.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These three pharmaceutical stocks could buffer your portfolio against further market turbulence.

Every major U.S. stock index has taken a step backward since the start of December. U.S. equities have reversed course this month because of inflationary pressures, the omicron variant, and year-end tax-loss harvesting. 

What's the best strategy to navigate this chaotic market? Dividend stocks are always worth owning as part of a well-rounded portfolio. Equities that dole out regular dividends to shareholders, after all, can smooth out the rough patches during volatile periods in the market. What's more, these types of stocks come with a built-in level of safety because of their attractiveness as passive income vehicles.  

Which dividend stocks are must-owns right now? The top pharma stocks Amgen (AMGN 2.15%), Bristol Myers Squibb (BMY 1.07%), and GlaxoSmithKline (GSK 2.52%) are all worth adding to your portfolio soon. 

Here's a look at the key features associated with each of these three rock-solid dividend plays

A tiny dividend sign on a twig next to a roll of U.S. currency.

Image source: Getty Images.

1. Amgen

Shares of this biotech heavyweight printed a fresh 52-week low last week. Mr. Market has severely punished this blue-chip drugmaker this year for some rather questionable reasons. In a nutshell, Amgen has had to deal with some pricing issues, stiffer competition, COVID-19 hiccups, and a slow ramp-up for a small cadre of newer medicines. The biotech's top-line growth hasn't skipped a beat, however. The company's annual revenue is on track to rise by a respectable 2.4% in 2021 relative to 2020. Moreover, Amgen's annual sales are forecast to jump by another 4.1% in 2022. As a result, the biotech recently announced another 10% boost to its dividend, bringing its annualized yield up to a handsome 3.8% at current levels. After this latest bump, Amgen's annual dividend yield is now well above the average for its major drug manufacturing peer group. 

2. Bristol Myers Squibb 

Like Amgen, Bristol's shares have been unfairly punished by this moody market in 2021. The drugmaker's shares, in fact, are dangerously close to their 52-week low at the time of this writing. Bristol's stock has lost favor with investors this year because of patent expiration headwinds, a key regulatory delay for the heart drug mavacamten, and management's cautious approach to business development. The net result is that Bristol's annualized dividend yield has ballooned to 3.48% based on Friday's closing price. Bristol thus offers investors a dividend yield that is in the upper echelon among major drug manufacturers. What's more, the drugmaker's stock is also trading at a bargain basement 2.57 times 2022 projected sales. Most big pharma stocks, by contrast, trade at over 4 times forward-looking sales. 

3. GlaxoSmithKline

U.K. based drugmaker GlaxoSmithKline has been the third best-performing big pharma stock in 2021. The company's shares have delivered total returns (including dividends) on capital of close to 19% so far this year. Investors have flocked this this high-yield dividend stock this year in response to the company's decision to enact a demerger that would separate its low-margin consumer healthcare business from its vaccine and pharmaceutical operations. As part of this strategy, Glaxo plans to reduce its dividend payout, but next year's projected yield should still be considerably above average for a big pharma stock. The company plans to use these anticipated cost savings to expand its pharmaceutical pipeline and product portfolio. All told, Glaxo appears to be on track to continue its bull run in 2022 and beyond.  

George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bristol Myers Squibb. The Motley Fool recommends Amgen and GlaxoSmithKline. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.