Decisions, decisions. Every investor has to make them. The good news is that some decisions aren't difficult. Three Motley Fool contributors identified dividend stocks that should be easy buy decisions for investors. Here's why they think Bristol Myers Squibb (BMY +0.51%), Gilead Sciences (GILD +1.93%), and Pfizer (PFE 0.92%) are investments you can make in June without any hesitation.
An industry stalwart that pays a high dividend
David Jagielski (Bristol Myers Squibb): Bristol Myers Squibb has been paying dividends for more than 90 consecutive years. It's as reliable an income stock as you can find.
The multinational pharmaceutical company is one of the largest healthcare businesses in the world. Its products, including blood clot medication Eliquis and cancer drug Opdivo, generate billions in revenue for the company every quarter.
NYSE: BMY
Key Data Points
What makes Bristol Myers Squibb a solid stock you can buy without hesitation is its strong track record for finding growth via acquisitions. The ability to effectively deploy capital and uncover good investments and acquisition opportunities has been key to its strong, continued growth.
Bristol Myers has made well over a dozen acquisitions over the years, including its mammoth $74 billion purchase of biopharmaceutical company Celgene in 2019 and its $13 billion purchase of cardiovascular disease specialist MyoKardia a year later.
The company has more than doubled its revenue over the last five years. In addition, the stock also pays investors an attractive dividend that yields around 3.6% at the current share price. And the company has boosted its payouts for 14 consecutive years.
While some dividend growth stocks have longer streaks of increases, some have maintained them with relatively modest payout boosts. Bristol Myers, however, has been generous -- as it has increased its dividend by 43% over the past five years. And the stock's payout ratio remains a manageable 65%, which makes it likely that the company will be able to continue raising its dividends in the future.
With a healthy yield, a good track record for growth, and solid financials, Bristol Myers Squibb is an easy dividend stock to justify putting in your portfolio today.
A cheap dividend growth stock
Prosper Junior Bakiny (Gilead Sciences): Dividend stocks are great, and it's even better when they can be bought at reasonable valuations. That's what investors can get with Gilead Sciences. The biotech giant has a business that is more than strong enough to generate consistent revenue, earnings, and cash flow to sustain dividend increases, while its valuation also looks attractive.
The drugmaker is one of the leaders in the HIV medicine market, with products such as Biktarvy, Descovy for pre-exposure prophylaxis (PrEP), and the newly approved Sunlenca, a six-month, long-acting HIV regimen that could be on a path to blockbuster status. Gilead Sciences is more than just an HIV company, however. Its oncology business has been on fire with several important approvals over the past few years.
NASDAQ: GILD
Key Data Points
In the first quarter, the company's revenue dropped by 4% year over year to $6.4 billion. But that slide was due to its coronavirus medicine Veklury, demand for which is predictably declining. Gilead Sciences' top line should start moving in the right direction again once its prior-year comparisons move past the peak pandemic years. Excluding Veklury, the company's Q1 product sales increased by an impressive 15% year over year.
Meanwhile, Gilead Sciences' forward price-to-earnings ratio sits at 11 right now. The average for the biotech industry is just over 15. Gilead Sciences looks reasonable at these levels. The company has raised its dividend by 74% in the past 10 years. At current share prices, it also offers an above-average yield of about 3.9%.
With a robust business, a strong dividend profile, and a mild valuation, Gilead Sciences looks like an excellent target for income-seeking investors.
Better growth prospects than meet the eye
Keith Speights (Pfizer): There's no question that Pfizer offers an attractive dividend. Its yield at the current share price tops 4.3%. The big drugmaker is in a strong enough financial position to keep the dividends flowing and growing for years to come.
What's more debatable, though, is how great Pfizer's growth prospects are. Sales for the company's COVID-19 products are falling. Pfizer also faces a patent cliff over the next few years as several of its older blockbuster drugs will lose exclusivity.
NYSE: PFE
Key Data Points
But I think that the pharma giant's growth prospects are better than meets the eye. For one thing, Pfizer projects that sales for its COVID-19 vaccines and antiviral therapy Paxlovid will rebound beginning in 2024.
The company also expects that its new product launches will generate enough revenue to more than offset the sales declines for the drugs that are about to lose patent exclusivity. In addition, business development deals should boost revenue by around $25 billion per year by 2030.
Overall, Pfizer appears to be in a good position to increase its total revenue (excluding COVID-19 products) at a compound annual rate of 10% from 2025 through 2030. With solid growth prospects, a juicy dividend, and an attractive valuation (shares trade at only 11.5 times forward earnings), this pharma stock looks like an easy choice.
