Saturday, March 29, 2014

Transition to Safer Stocks: Will Big Pharmaceuticals Make You Financially Healthy

Have you noticed in the last several days of this volatile market, when many of the mid cap and small cap stocks were tanking, the blue chip stocks, such as AT&T (T) and Merck (MRK) went up? Investors are getting worried and nervous, and when that happens, they move their money cash and more conservative stocks, generally stocks that pay dividends. The dividends help to reduce volatility and return the investment capital back faster.

Two years ago, I suggested big pharmaceutical stocks as a contrarian play as big pharma stocks were down almost 2% during the first few months of 2012, whereas the S & P 500 was up about 9% during that same time frame. The suggestions included Johnson &  Johnson (JNJ), which has risen by almost 50% in the last couple years, and Merck (MRK), which has gone up by about 44%, both far outperforming the S & P 500, which went up around 31%.

These pharmaceutical stocks are still worth a second look, especially for long term investors. According to the free list of high yield big pharmaceutical stocks at, there over a dozen pharmaceutical stocks and more than half with yields of 3.0% or more. 

Merck (MRK), is one of the largest pharmaceutical companies in the world. This is the company that makes such products as Gardasil, Singular, Levitra, Nasonex, Claritin, Clarinex, Coppertone, MiraLax, and Bain de Soleil. The stock trades at 38 times trailing earnings and 15 times forward earnings.   The stock pays a healthy yield of 3.2%.

Johnson &  Johnson (JNJ), founded in 1886, is considered to be the world's largest pharma company. It is a manufacturer of pharmaceutical, medical devices and consumer packaged goods. Products include Band-Aids, Acuvue, Listerine, OneTouch Blood Glucose Meter, Splenda, and Tylenol. The stock has a trailing price to earnings ratio of 20 and a forward PE ratio of 16, with a generous yield of 2.8%.

If you want a list of over a dozen high yield pharma stocks, that can be downloaded and sorted, go to

Disclosure: Author owns T.


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