Want a way to improve the odds of earning a good return and potentially becoming a millionaire? Consider investing in stocks that have both attractive growth opportunities and that pay an above-average dividend. These stocks aren't all that common, but one of the best ones that meet those criteria is Gilead Sciences (GILD 2.45%).
Gilead's growth potential just got an upgrade
Before the end of last year, Gilead Sciences investors received some great news: The company's twice-yearly injectable treatment for HIV obtained approval from the Food and Drug Administration.
Sunlenca (lenacapavir) will give people with HIV who haven't had success with other treatments another alternative, one that can be more convenient than taking daily pills. With the approval, Gilead has added a potential blockbuster to its portfolio as analysts project Sunlenca could hit a peak of $1.5 billion in annual revenue.
NASDAQ: GILD
Key Data Points
That complements an already strong HIV portfolio that through the first nine months of 2022 generated more than $12 billion in revenue. Meanwhile, the company is also becoming more diverse with an exciting opportunity in oncology, where Gilead has been generating some good initial growth from its cancer drug Trodelvy.
For the three-month period ending Sept. 30, 2022, Trodelvy's sales totaled $180 million, rising an impressive 78% year over year. At its peak, the drug can generate up to $2 billion in revenue, according to analyst estimates, so it still has a lot of runway left.
There's a lot of growth on Gilead's horizon, and with the company being so successful in creating HIV treatments, it might remain a top healthcare stock to own for years. Analysts from Fortune Business Insights project that the global HIV drug market will be worth more than $45 billion by 2028, growing at a compound annual rate of 5.9% until then.
The stock's yield is well above average
Another promising feature of investing in Gilead is that the company pays a relatively high dividend, which yields 3.5% today. That's about double the S&P 500 average of 1.7%. The company has also increased its dividend payments by 40% over the past five years, and that could be a trend that continues if it is able to generate stronger financial results in the future given its promising growth opportunities.
While investors might be concerned about the company's seemingly high payout ratio (which is over 100%), the dividend is safe when looking at cash flow:
Fundamental chart data by YCharts.
If Gilead can keep up the strong performance, there's no reason dividend investors shouldn't continue to expect more payout hikes. Although these are never guaranteed, in Gilead's case, they do look probable.
Can investing in Gilead Sciences make you a millionaire?
Over the past five years, Gilead's total returns (including dividends) have been 25% -- well short of the 55% returns that the S&P 500 has delivered over the same time. Gilead's track record hasn't been great as a market-beating investment, but that can change given the strong assets it has and as it diversifies more into oncology and becomes less dependent on its HIV products.
But at the same time, the company might still need more of a catalyst to sustain high-enough growth, in the long run, to ensure that it can consistently outperform the market. And so while I'm confident you can earn a good return on the stock over the years, it alone might not be enough to help you become a millionaire.
It can be a pillar as part of a larger portfolio, but it's not one you'll want to rest your hopes on entirely. Plus, it's also important to diversify your risk with other quality growth stocks so that you aren't putting all your money into just a single investment.
