Dividend stocks are a great way to grow your money over time. Moreover, this class of equities tends to be significantly less volatile than its pure-play growth counterpart -- a feature that should appeal to individuals concerned about the current state of the U.S. stock market.
A proven safe haven
George Budwell (Amgen): Even though biotech blue blood Amgen is presently going through a trough period from a top-line growth standpoint, investors have still bid up this large-cap stock by a healthy 7.5% so far this year. What's particularly impressive is that Amgen's shares have steadily pushed northward in 2022 while the broader biotech space has fallen on hard times. The SPDR S&P Biotech ETF, for instance, is currently down by a hefty 19.7% for the year at the time of this writing.
Investors have flocked to this top biopharmaceutical stock in recent weeks for two key reasons:
- Amgen stock pays out an above-average dividend yield of 3.21% on an annualized basis. What's more, the company's 12-month trailing payout ratio of 68.5% suggests that its quarterly distribution is a fairly safe bet.
- Although Amgen's annual sales have taken a hit in recent times due to a mix of patent expirations and COVID-19-related issues, the biotech's top line is expected to perk up starting as early as next year. Wall Street, for instance, has the biotech's top line rising by a respectable 4.7% in 2023. Moreover, this next period of growth for the company ought to be fueled by multiple products, such as the cancer drug Lumakras, the asthma medication Tezspire, and its emerging biosimilar franchise.
All told, Amgen is well positioned to continue delivering market-beating gains for the foreseeable future. Its top-notch dividend program should also help smooth out the rough patches during this exceedingly volatile market.
A healthcare SaaS with growth and dividends.
Patrick Bafuma (National Research Corporation): When you think of dividends, you may think of stodgy old-fashioned corporations. Maybe you consider dividend investing more of a wealth protector than a wealth generator. With NRC Health, you can have both -- a growing healthcare technology company that pays you to own shares. It has handily beaten the S&P 500 over the last five years -- 104% versus 83% gains, and that doesn't even consider compounding its 2.4% dividend yield.
NRC Health provides data-driven solutions for healthcare organizations to better understand what matters most to each individual they serve. By collecting and analyzing mountains of patient feedback, the software-as-a-service (SaaS) company enables hospital systems to have better patient acquisition, loyalty, and retention. This provides better tracking of a patient's sense of quality care and service. The $965 million healthcare company helps busy clinicians cut to the chase, too. One of its offerings enables dialogue with patients before the healthcare visit, allowing for a better understanding of patient preferences, fears, and expectations for their upcoming appointment. Because of this, care teams can more easily personalize care delivery. In turn, the healthcare system can see improved patient satisfaction, better clinical outcomes, reduced overall costs, and lasting patient-provider relationships.
In its most recent quarter, NRC Health achieved double-digit revenue and operating income growth with the help of its subscription-based model. Plus the company is gaining traction cross-selling its other products. The number of clients utilizing multiple solutions was up to 32% in the fourth-quarter of 2021, a slight uptick from 28% at the beginning of 2021 -- leaving room for future growth. And the desire for personalized care isn't going to go away overnight, as there are multiple financial drivers to encourage patient satisfaction. A satisfied patient often leads to decreased malpractice claims, plus positive patient experiences play a small role in Medicare and medicaid payments. Given such financial implications, hospital systems will likely continue to be incentivized to please their customers. With these tailwinds, an ability to cross-sell its sticky products, revenue growth just above 10% year over year, and a 2.4% dividend yield, it's hard to envision a healthcare stock with a better blend of safety and growth than NRC Health.