2 high yielding stocks you can buy and hold for years
IIf you are investing in a dividend paying stock, it is important to balance return and risk. While you don’t want to be too aggressive in looking for 10% dividend yields, you also don’t want to settle for nominal payouts. The average stock on the S&P 500 is earning less than 1.3% right now, which isn’t much.
But it is possible to find a better payment. Two stocks that pay at least 3% and are fairly safe long-term buys are Gilead Sciences (NASDAQ: GILD) and Campbell Soup (NYSE: CPB). Let’s take a closer look:
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1. Gilead Sciences
Biopharmaceutical company Gilead Sciences pays investors a 4.3% return. That’s a big payoff for a stock that’s not that risky. In each of the past five years, the company has generated at least $ 7.5 billion in free cash flow, more than double the amount it paid in dividends. And with its COVID-19 treatment remdesivir which increased sales by more than $ 2 billion in the first two quarters of this year, it has helped the company generate even more cash flow: nearly $ 12 billion. dollars in the past 12 months.
Although sales of anti-HIV products (its main source of revenue) have declined by 7% so far in 2021 due to increased competition from generics, Gilead’s revenue is still relatively stable even excluding remdesivir. (which may not be a source of future income for the business). At $ 10.2 billion for the first six months of this year, the company’s revenue would have fallen only 3% year-over-year without the COVID-19 product. This is because other segments, including cell therapy and hepatitis, have been able to fill some of this deficit.
Looking ahead, the company also has more than a dozen other programs in its pipeline that are in the Phase 2 testing phase or later and have the potential to be long-term growth engines for its business. And investors shouldn’t entirely overlook the potential of remdesivir. While more than 50% of the American population has been fully vaccinated, this is not the case in many parts of the world. This could therefore make it an effective treatment option in these locations.
One stumbling block is the World Health Organization’s recommendation last year that doctors not use remdesivir due to a lack of evidence that it improves outcomes. But in September, Gilead released the results of a study that showed that when taken early (before hospitalization), the treatment “significantly reduces the risk of hospitalization in high-risk patients.” Currently, it is only approved for use in hospital patients.
These latest findings suggest there may still be hope for the drug – and at least in the short term, it could continue to bolster the company’s finances. Gilead said he plans to share the study data with regulatory agencies, which he hopes could lead to broader approval of the drug.
But even without remdesivir, the business remains stable and still feels like a solid income investment to hold in your portfolio for years to come.
2. Campbell Soup
Packaged food company Campbell Soup has just had a tough fourth quarter, where net sales of $ 1.9 billion for the period ending Aug. 1 were down 11% year-over-year.
However, with revenue of $ 8.5 billion for the full year, it was still a relatively strong performance as the company’s revenue declined only 2% compared to the previous year, when consumers stocked up on essential products at the start of the pandemic. In fiscal 2019, which would have been a more typical year for the company, Campbell’s only generated $ 8.1 billion.
For the new fiscal year, Campbell’s expects its net sales to remain stable or not decline by more than 2%. He also predicts that his adjusted earnings per share of $ 2.98, or double the $ 1.48 he pays in dividends per share, will fall to between 4% and 8%. This is not a drop enough to put the payment at risk.
And now, to boost sales amid the pandemic’s mitigation, the company has announced several new product initiatives, including the launch of more herbal products. âOur new articles focus on emerging opportunities and relevant trends in wellness,â CEO Mark Clouse told investors on a recent conference call.
Campbell’s $ 0.37 quarterly dividend earns 3.6% and can be another solid source of recurring income for investors. With minimal risk in its business and plenty of household groceries in its portfolio, Campbell’s is a safe dividend-paying stock to buy and forget.
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David Jagielski has no position in the stocks mentioned. The Motley Fool recommends Gilead Sciences. The Motley Fool has a disclosure policy.
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