Is the trend your friend?
That depends. If the trend is the outgrowth of evolving cultural habits and observable demography, it is. After all, if you want to invest in a trend, you want to be assured the trend is sustainable.
Empirical evidence suggests trends in obesity and age are sustainable and open to distant extrapolation. This is good news for companies that offer antidotes and palliatives to combat the side effects of obesity and older age.
In other words, the trends in obesity and aging are good news for Big Pharma. One particular innovation is being eyed by pharmaceutical companies…and could change the entire way in which doctors diagnose medical issues (click here for all of the details).
The United States has the highest rates of overweight and obesity, with fully a third of the population obese. The percentage is expected to rise to 50% by 2030.
Not only is the Unites States getting bigger, it’s getting older. In 2050, the population aged 65 and over is projected to be 83.7 million, almost double its estimated 43.1 million in 2012.
Obesity and age are gateways to a slew of health problems: diabetes, heart disease, hypertension, cancer, high cholesterol, gallstones, arthritis, high blood pressure, infertility, impotence, and more.
Big Pharma is well-positioned to exploit the opportunities to treat these afflictions. These companies are established and sport huge resources. Most possess an array of patented pharmaceuticals and treatments. Most generate copious cash flows on their monopoly positions.
From an income investor’s perspective, the attraction becomes more apparent when dividends are vetted. Investors receive not only the promise of dividend growth, but growth from a high-yield basis relative to most of the market.
Pfizer Corp. (NYSE: PFE) proves my points. The company sports a plethora of popular pharmaceuticals – Lipitor, Celebrex, Viagra to name a few – that treat obesity and age-related ailments.
Just as important, Pfizer’s many drugs produce huge cash flow. The cash account totaled $33 billion at last count. Plenty of cash on hand means Pfizer is sufficiently funded to develop new pharmaceuticals, or to buy them. On the latter, Pfizer recently announced its intention to buy Hospira (NYSE: HSP), which owns a portfolio of injectable (and lucrative) drug therapies.
Pfizer’s dividend was recently increased 7.7% to $1.12, which lifts the yield to 3.3%. Over time, Pfizer’s dividend will grow, as will the cost-basis yield to investors.
Income investors can further exploit obesity and aging trends with Merck & Co. (NYSE: MRK). The company’s drug portfolio includes treatments for arteriosclerosis, cancer, cardiovascular diseases, diabetes, inflammatory/autoimmune diseases, insomnia, Alzheimer’s, osteoporosis, and respiratory diseases. Merck also has several promising candidates under regulatory review, such Vorapaxar, an anti-thrombotic medication.
Like Pfizer, Merck generates copious amounts of cash, which it employs to enhance shareholder value. Since 2010, Merck’s share count has been reduced by 7.7%, while the dividend has been increased 18%.
Merck’s dividend today yields 3.1%, and will surely yield more than 3.1% in the future.
Amgen, Inc. (NASDAQ: AMGN) offers a lower yield – at 2.1% – than Pfizer or Merck, but if offers the greatest dividend-growth potential. Since 2011, the quarterly dividend has grown to $0.79 a share from $0.28. The latest increase (this month) hiked the dividend payout 29.5%.
Like Pfizer and Merck, Amgen develops and markets a portfolio of drugs to treat a variety of obesity and age-related conditions. Its most popular drug ENBREL is used to treat patients with rheumatoid arthritis and plaque psoriasis patients. Other drugs focus on kidney disease, osteoporosis, and colorectal cancer.
The trends in obesity and age might be hostile to individual health, but they can be friendly to an income investor’s portfolio.
For investors seeking big profits from the health care sector, there is a new opportunity. It’s called the “Smart Pill.” It stands to change the face of modern medicine in the coming years. Early investors could stand to reap big profits as this opportunity unfolds. To get all the details, just click here now.
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Is the trend your friend?