Investors seeking reliable passive income often turn to the best dividend stocks, especially those trading near their 52-week lows. These stocks offer substantial dividend yields and the potential for significant capital appreciation. Healthcare is among the most promising sectors for high-yield dividend stocks, with several stalwart companies currently undervalued.
3 Best Dividend Stocks
1. Pfizer
Pfizer (NYSE: PFE) shares have plummeted about 55% from their peak in early 2022, primarily due to declining sales of its COVID-related products. Despite this setback, Pfizer boasts a remarkable 6.2% dividend yield at recent prices. Pfizer’s ability to navigate revenue declines is noteworthy. The company has consistently raised its dividend since 2009, demonstrating resilience during challenging periods.
This year, management anticipates adjusted earnings between $2.15 and $2.35 per share, comfortably covering the annual dividend payout of $1.68 per share. Investors can expect continued dividend growth, supported by the approval of nine new drugs in 2023 and the acquisition of Seagen, a cancer drug developer.
2. Johnson & Johnson
Another top contender among the best dividend stocks is Johnson & Johnson (NYSE: JNJ). The stock is currently down about 22% from its all-time high in 2021. Despite this, J&J raised its dividend payout for the 62nd consecutive year in April, offering a solid 3.4% yield at current prices.
J&J’s resilience is evident in its ability to navigate fluctuating COVID-19 product sales while still increasing its dividend by 30.5% over the past five years. The spin-off of its consumer goods segment into Kenvue has allowed J&J to focus on higher-growth areas, with management expecting a 7.7% rise in adjusted earnings per share this year. Significant growth in medical technology and pharmaceutical segments, such as the 15% year-over-year sales increase of Impella heart pumps, underscores J&J’s solid prospects for continued dividend growth.
3. Bristol Myers Squibb
Bristol Myers Squibb (NYSE: BMY) shares have declined about 50% from their peak in late 2022, resulting in a compelling 5.9% dividend yield at current levels.
Bristol Myers Squibb remains a robust dividend payer despite reporting a significant $11.9 billion loss in the first quarter, primarily due to a $12.9 billion charge for acquired in-process research and development. The company has increased its payouts for 15 consecutive years, with a 46% rise over the past five years. With $12.5 billion in free cash flow generated over the past year and a payout ratio of just 38%, the company is well-positioned to sustain and grow its dividend.
Bristol Myers Squibb’s future looks promising, particularly with its recent acquisitions. The FDA is reviewing Karuna Therapeutics’ next-generation schizophrenia treatment, KarXT, which has shown significant clinical improvements. This and other late-stage development candidates bode well for another extended streak of dividend increases.
The Healthcare Sector’s Dividend Potential
The healthcare sector offers some of the best dividend stocks currently trading near their 52-week lows. Pfizer, Johnson & Johnson, and Bristol Myers Squibb are prime examples of companies with robust dividend yields and strong potential for future growth. These stocks allow investors to earn substantial passive income while benefiting from potential capital appreciation as the market recognizes their long-term value.
