Staying a few steps ahead of the latest stock market trends is one of the best ways to improve your profits. For example, being able to identify sectors that are either outperforming the overall market or ready to break out higher can end up paying nicely. One sector in the stock market had a pretty rough 2019 but looks close to taking off in the coming trading sessions – biotechnology.
The biotech sector features a lot of companies that rebounded with strength off of the March lows but have slowed down a little bit as of late. Biotechs can be challenging to assess since many are small-cap companies that will spend millions of dollars on drugs that never make it past clinical trials. With that said, there are some very exciting companies in the sector that look like they are ready for new highs. That includes Amgen, Inc. (NASDAQ:AMGN), one of the best biotech businesses in the industry. Let’s take a look at a few reasons why Amgen is a buy right now.
Diversified Portfolio of Drugs
Amgen is one of the industry-leading biotechnology companies that has been creating new medicines and building a diversified portfolio of assets for years. It was one of the earliest biotech companies to specialize in biologically-derived medications, which are known to be more effective and safer than chemical-based pharmaceuticals. When you are looking to buy a biotech company, purchasing shares of an established business like Amgen with innovative medicines that are already in high-demand is a nice way to limit your risk.
Amgen has tons of different drugs that help people with important health issues such as bone health, cardiovascular diseases, nephrology, and inflammation. One exciting example to mention is Amgen’s acquisition of Otezla from Celgene Corp back in November of 2019. This medicine helps people who are dealing with moderate to severe plaque psoriasis and has a ton of positive momentum as it has already reached $479 million in sales in Q1 2020 alone. This company is also well-positioned to grow since many of its medicines are intended to help out the rapidly increasing number of older Americans. In fact, product sales are already rising and the company reported a total year-over-year Q1 revenue increase of 11% as of its last earnings report.
Steady Dividend Growth
Another great reason to buy Amgen stock is that it has been bumping up its dividend payouts nicely over the last several years. Many biotech companies elect to not pay dividends and instead reinvest the money into the company for growth. It’s worth noting that Amgen was the first biotech company to begin issuing dividends and they have since regularly increased the payout over the years. In 2020 alone, they upped their dividend payout by 10%.
This type of strong dividend growth history gives investors more confidence in a company operating in a traditionally volatile sector. With a current 2.8% dividend yield along with solid growth prospects, Amgen offers a great opportunity to gain exposure to the biotech sector.
Making an Impact in the Fight Against COVID-19
Most investors look at the profit potential for a company before opening a new position, and it’s hard to blame them. After all, everyone wants to make money in the market. However, Amgen is a stock that offers something positive besides profit potential for investors – the opportunity to help make an impact in the fight against COVID-19.
Amgen is currently collaborating with Adaptive Biotechnologies to discover and develop fully human neutralizing antibodies targeting COVID-19. This is groundbreaking research that has the potential to make a massive difference in the global pandemic and even save lives. The fact that an investment in Amgen can potentially make a humanitarian impact is another great reason why this biotech company is worth a look.
Investors that are new to the biotech sector usually make two common mistakes. They will often buy a “one-hit wonder” company with one hot drug that never lives up to its potential or they will get impatient while the company that they purchased works on creating new drugs and getting approval from the FDA.
With Amgen, you can avoid both of those costly beginner mistakes and buy a company with a proven track record for excellence. The innovative list of products that this company has assembled along with its reliable dividend growth absolutely makes it worth a look. Combine that with the fact that this company can help with the COVID-19 situation and is getting closer and closer to its 52-week highs and it’s easy to understand why Amgen is a solid buy.
Companies Mentioned in This Article
10 Rock-Solid Dividend Paying Stocks to Own
Historically low interest rates have made it difficult over the last decade for income-oriented investors that want to generate safe cash flow for their retirements.
Dividend-paying stocks have become more appealing to income investors because of their competitive yields, the favorite tax treatment that dividends receive and their ability to grow their payouts over time. While fixed interest rates from bond investments will lose purchasing power to inflation over time, the purchasing power of income from dividend growth stocks is more protected because companies tend raise their dividend payments every year.
In this slideshow, we look at ten of the best high-dividend stocks that offer strong yields (above 3.5%), have consistent cashflow and a strong track record of dividend growth. The companies in this slideshow have all raised their dividend every year for the last ten years.
These companies also have low payout ratios (below 75%), meaning that they will have the ability to continue to pay their dividend if their earnings have a temporary dip.
Stock prices will always fluctuate, but the dividends paid by these rock-solid dividend payers should remain secure with moderate earnings growth.
View the "10 Rock-Solid Dividend Paying Stocks to Own".