Key Points
Broader equities have performed so well in recent years that the dividends companies pay haven’t kept pace. As a result, the S&P 500‘s average yield is just 1.1% right now. Thankfully, it’s possible to find high-yield dividend stocks that are worth investing in. Here are three examples: Pfizer (NYSE: PFE), Novo Nordisk (NYSE: NVO), and Sanofi (NASDAQ: SNY). All three have faced some issues lately, but they are worth sticking with for the long haul, especially for dividend seekers. Let me explain.
1. Pfizer
Several headwinds — including mediocre financial results and upcoming patent cliffs — have pushed Pfizer’s shares down significantly over the past few years. But the drugmaker hasn’t suspended or decreased its payouts. As a result, Pfizer’s forward dividend yield is now a juicy 7.1%. And despite the issues it has faced, it’s a great time to pick up Pfizer’s shares on the dip. The pharmaceutical leader boasts several products that are posting solid sales growth and should help nudge the top-line in the right direction over the medium term. The list includes Padcev, a cancer medicine, and Abrysvo, a respiratory syncytial virus vaccine.
Further, the healthcare giant has a deep pipeline that should make significant progress over the next few years. Pfizer’s efforts in oncology and weight-loss look particularly promising. By the end of the decade, the company should launch brand-new products in these fields to help it overcome the loss of patent exclusivity for medicines like Eliquis, an anticoagulant, and drive long-term growth.
Pfizer’s financial results won’t bounce back immediately, but its share price could jump well before then as the company makes solid clinical and regulatory progress with key pipeline programs. That’s why investors shouldn’t wait too long before initiating positions.
2. Novo Nordisk
Novo Nordisk is best known for its work in the diabetes and weight loss markets, and with good reason. The company remains one of the undisputed leaders in these fields, despite recent setbacks that have sunk its stock price over the past couple of years. Novo Nordisk is well-positioned to bounce back, though. The company boasts a strong pipeline of candidates across its core therapeutic areas. Novo Nordisk’s zenagamtide (amycretin) is currently undergoing phase 3 studies — in a subcutaneous and an oral formulation — as a potential weight loss treatment in people who are either overweight or obese.
It also posted strong phase 2 results, showing statistically significant reductions in blood sugar and weight loss in patients with type 2 diabetes.
Zenagamtide could become an important drug for Novo Nordisk as it moves beyond its famous therapies, Ozempic and Wegovy. And the Denmark-based pharmaceutical leader is also inching closer to approval for CagriSema, another diabetes and weight-loss treatment. Elsewhere, Novo Nordisk is making progress in diversifying its lineup. It is particularly targeting rare blood diseases. The company recently announced positive phase 3 clinical trials for denecimig, an investigational treatment for hemophilia.
Novo Nordisk’s strong position in the rapidly growing GLP-1 area and clinical progress elsewhere could allow the stock to recover. Meanwhile, Novo Nordisk offers a forward yield of 3.6% and routinely increases its payouts, making it a great pick for income seekers.
3. Sanofi
Sanofi has faced some headwinds recently, including a leadership change and clinical setbacks. The stock has lagged broader equities as a result. However, there remain good reasons to be optimistic about Sanofi’s long-term prospects. Here are three of them. First, the company’s most important growth driver, Dupixent, is still performing very well. Dupixent is a medicine indicated for the treatment of eczema and COPD; Sanofi shares the rights to this therapy with Regeneron (NASDAQ: REGN). Dupixent is one of the world’s best-selling drugs and is still helping Sanofi post decent sales growth.
Second, Sanofi should make solid pipeline progress over the next few years. For instance, the company’s frexalimab, an investigational therapy for multiple sclerosis (among other diseases), is undergoing phase 2 and phase 3 clinical trials. Frexalimab posted excellent mid-stage results and could eventually generate well over $1 billion in annual sales at its peak. Sanofi boasts several other promising candidates. Third, the company offers an attractive forward dividend yield of 5.6% and regularly increases its payouts. The dividend is safe despite recent obstacles, and the stock is worth holding for a while.
Should you buy stock in Pfizer right now?
Before you buy stock in Pfizer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pfizer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $397,351!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,304,257!*
Now, it’s worth noting Stock Advisor’s total average return is 934% — a market-crushing outperformance compared to 210% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Prosper Junior Bakiny has positions in Novo Nordisk. The Motley Fool has positions in and recommends Novo Nordisk, Pfizer, and Regeneron Pharmaceuticals. The Motley Fool has a disclosure policy.
