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3 Stocks That Just Declared Dividend Raises

By Eric Volkman – Dec 16, 2021 at 11:30AM

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There's still time to take advantage of the dividend increases from these three healthcare powerhouses.

For all of its attractions, the healthcare sector isn't always a hotbed of dividend stocks. Drugs are expensive to develop and sell while big pharmacy chains need lots of real estate and personnel. So costs are often high, which can limit shareholder payouts.

But as ever in the stock market, there are some notable exceptions. In the very recent past, three prominent names in the healthcare industry have declared dividend raises: Pfizer (PFE 0.65%), Abbott Laboratories (ABT 1.55%), and CVS Health (CVS 1.33%). Let's take a closer look at this increasingly generous trio.

A medical professional holding a dollar sign paperweight.

Image source: Getty Images.

1. Pfizer

Of our three stocks, Pfizer is arguably the healthcare sector's rock star at the moment. That status has been enhanced, if modestly, by the company's recent dividend raise. Earlier this month, the company declared its new quarterly payout of $0.40 per share. While that's only up a penny, it is the 333rd quarterly dividend in a row that the company has paid, a dizzying number by any standard.

Pfizer has been going gangbusters since its Comirnaty coronavirus vaccine, co-developed with Germany's BioNTech, was approved in most major countries starting last year. While that's putting some serious zip into Pfizer's top and bottom lines, it's not the company's only catalyst.

Aside from vaccines, all but one of Pfizer's six product categories saw revenue increases in the third quarter. This included oncology (up 12% to $3.1 billion), hospital products (up 32% to almost $2.4 billion), and internal medicine (up just 1% to $2.1 billion). Its much smaller rare-diseases area saw a 16% increase to $869 million while the inflammation and immunology segment fell 7% to $1.1 billion.

The pharmaceutical industry giant is in an enviable position right now with Comirnaty -- still a go-to coronavirus vaccine in a world facing new variants -- buttressed by Pfizer's array of other popular products.

The latest dividend will be dispensed March 4 to stockholders of record as of Jan. 28. At the most recent closing share price, it would yield 2.9%.

2. Abbott

Elsewhere in the pharmaceutical sphere is Abbott Laboratories, one of the most reliable dividend payers and raisers in the sector. In fact, the company is about to graduate to Dividend King status with its 50th consecutive annual dividend raise. The company will boost its quarterly payout 4% to $0.47 per share. This will be the company's 392nd dividend increase in a row, dating back to 1924 and surpassing Pfizer's impressive streak.

In the latest quarter, Abbott managed to increase sales in all four of its product categories. Most notable was its diagnostics unit, which enjoyed a nearly 50% year-over-year rise in sales thanks to COVID-19 tests. Meanwhile, the company's big, established pharmaceuticals business and its medical devices unit also saw healthy increases of around 15% apiece. The smallest division, nutrition, recorded a nearly 10% gain.

For my money, Abbott has one of the best mixes of newer medications with growth potential on the one hand complemented by more established, income-earning lines. This is a potent blend that not only produces solid fundamentals but also keeps investors encouraged to hold on to their shares.

And then there's the company's ever-growing dividend, yielding 1.4% at the current stock price. It is to be paid next Feb. 15 to investors of record as of Jan. 14. 

3. CVS

One of the top venues helping to fuel the success of Pfizer and Abbott is your local CVS. The sprawling pharmacy chain declared its own dividend increase in mid-December, hiking its quarterly payout 10% to $0.55 per share.

If pharmaceutical makers like Pfizer and Abbott are doing well, it's nearly a lock that good pharmacy operators won't be far behind. Sure enough, CVS managed to crank revenue 10% higher in its most recently reported quarter and improve non-GAAP (adjusted) net profit at double that rate.

Customers need to get those coronavirus vaccine shots somewhere, and CVS has been a leader in providing access to the jabs they need during this highly persistent pandemic. But the company is also adept at growing its other businesses. The healthcare benefits and retail/long-term care segments -- both significant revenue generators in their own right -- also grew sales at healthy rates during the quarter.

CVS should continue to do well. The company raised its guidance for both adjusted per-share earnings and cash flow from operations -- and that bodes well for more dividend raises to come. Meanwhile, CVS's latest dividend is to be distributed Feb. 1 to shareholders of record as of the Jan. 21. The $0.55-per-share payout would yield 2.2% at the latest closing stock price.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.

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