When it comes to investing in dividend stocks, quality is always the most important consideration. If a company's business is faltering or its industry is changing dramatically and that's about to cause sales to plummet, then no amount of dividend yield is likely to make up for the losses that could occur in a shaky company's share price. This is especially true in healthcare because dividend-paying healthcare stocks always face the threat of falling sales tied to expiring patents. Because this makes investing in dividend paying healthcare trickier than investing in other sectors.
Let's consider some of the most widely-owned dividend-paying healthcare stocks and see if one may be a better investment than another: First up is global healthcare giant GlaxoSmithKline (NYSE:GSK), which boasts an eye-popping dividend yield of 5.8%. Pfizer's (NYSE:PFE) recently announced megadeal to merge with Allergan is expected to result in $2 billion in cost-savings that should allow that deal to begin adding to earnings by 2018. After the deal is complete, Pfizer plans to return 50% of annual adjusted earnings per share to investors via dividends. Amgen (NASDAQ:AMGN) is paying out just 26% of its free cash flow in the form of dividends and its pipeline could offset a lot of its patent risk, this company's risk/reward seems to be pretty fairly balanced.
Source: Motley Fool
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