Investors’ confidence has taken a hit due to macroeconomic issues. As bear-market risks remain, I think it is ideal to invest in quality dividend stocks, Bristol-Myers Squibb Company (BMY) and Gilead Sciences, Inc. (GILD), that can ensure a steady income source.
On Monday, the S&P 500 experienced minimal advancement and concluded the day with a slight increase from its lowest point of the session. This was due to the rise in U.S. Treasury yields as investors braced for this week’s testimony from Federal Reserve Chair Jerome Powell and the release of the February jobs report.
Moreover, San Francisco Fed President Mary Daly recently said that the Federal Reserve policymakers would need to raise interest rates higher and keep them there longer to tackle the higher prices caused by sticky inflation.
Furthermore, according to Morgan Stanley stock strategist Mike Wilson, a bear market unwinding is still on the horizon. He described the market’s recent resilience as running on “borrowed time.” Also, Mike had already warned that the upswing in the stock market during 2023 is a trap, and March could bring further losses and difficulties.
Take a detailed look at the stocks mentioned above:
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, and neuroscience diseases.
On March 3, 2023, BMY announced that the European Commission had granted full Marketing Authorization for Reblozyl, a first-in-class therapeutic option, for treatment in adult patients of anemia associated with non-transfusion-dependent beta thalassemia.
Reblozyl is currently approved in the European Union, United States, and Canada to address anemia associated with transfusion-dependent beta thalassemia and transfusion-dependent lower-risk myelodysplastic syndromes.
On March 2, 2023, BMY, in collaboration with Janssen Pharmaceuticals, Inc. of Johnson and Johnson (JNJ), announced the launch of the Phase 3 Librexia program studying milvexian, an investigational oral factor XIa (FXIa) inhibitor (antithrombotic).
Roland Chen, M.D., senior vice president and head, Cardiovascular Development, Global Drug Development of the company, said, “BMY and Janssen bring deep heritage and expertise in cardiovascular care to this program, in partnership with renowned experts, and we look forward to continuing to evaluate the potential of milvexian to address key unmet medical needs for patients living with thrombotic diseases.”
BMY’s forward EV/Sales of 3.77x is 5.3% lower than the industry average of 3.98x. Its forward Price/Sales multiple of 3.10 is 30.6% lower than the industry average of 4.46. Its forward EV/EBITDA multiple of 8.56 is 37.7% lower than the industry average of 13.73.
BMY has paid dividends for six consecutive years. Its dividend payouts have increased at 9.2% CAGR over the past three years. Its current dividend yield is 3.29%. Its four-year average yield is 3.02%. Also, it has paid dividends for 33 consecutive years.
BMY’s total in-line products U.S. revenues came in at $5.27 billion for the fourth quarter that ended December 31, 2022, up 11.7% year-over-year. Its U.S. total revenues increased 5.4% year-over-year to $7.92 billion.
Also, its total expenses decreased 5.7% year-over-year to $9.55 billion, while its non-GAAP EPS stood at $1.82. Non-GAAP net earnings attributable to BMY stood at $3.87 billion.
Street expects BMY’s revenue to increase 1.8% year-over-year to $46.99 billion in the current fiscal year 2023. Its EPS is estimated to rise 4.3% year-over-year to $8.03 in the same year. Additionally, the stock has topped consensus EPS and revenue estimates in the trailing four quarters, which is impressive.
The stock declined marginally intraday to close the last trading session at $68.90.
BMY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Value and a B for Quality, Growth, Sentiment, and Stability. Within the Medical - Pharmaceuticals industry, it is ranked #2 out of 167 stocks.
Beyond what is stated above, we’ve also rated BMY for Momentum. Get all BMY ratings here.
Gilead Sciences, Inc. (GILD)
GILD is a biopharmaceutical company that discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally.
On February 22, 2023, Kite, a Gilead Company, completed the acquisition of Tmunity Therapeutics (Tmunity), a clinical-stage, private biotech company focused on next-generation CAR T-therapies and technologies.
The acquisition of Tmunity complements Kite’s in-house cell therapy research capabilities by adding pipeline assets, platform capabilities, and a strategic research and licensing agreement with the University of Pennsylvania.
On February 3, 2023, GILD stated that the U.S. Food and Drug Administration (FDA) had approved Trodelvy for treating breast cancer in adult patients who have received endocrine-based therapy and at least two additional systemic medicines in the metastatic situation.
GILD’s forward EV/Sales of 4.44x is 11.5% lower than the industry average of 3.98x. Its forward Price/Sales multiple of 3.79 is 15.1% lower than the industry average of 4.46. Its forward EV/EBITDA multiple of 8.82 is 35.7% lower than the industry average of 13.73.
On February 2, 2023, GILD announced an increase of 2.7% in the company’s quarterly cash dividend, beginning in the first quarter of 2023. The increase will result in a quarterly dividend of $0.75 per share of common stock, payable on March 30, 2023.
GILD pays $3.00 annually as dividends. This translates to a yield of 3.70% at the current price, compared to the 4-year average dividend yield of 4.00%. Its dividend payments have grown at a CAGR of 5% and 7% over the past three and five years, respectively. Also, it has raised dividends for seven consecutive years.
During the fiscal 2022 fourth quarter ended December 31, GILD’s total revenues increased 2% year-over-year to $7.39 billion. Its non-GAAP operating income grew 79.1% year-over-year to $2.70 billion. Non-GAAP net income attributable to GILD was $2.11 billion, an increase of 143.2% year-over-year, while the company’s non-GAAP EPS rose 142% year-over-year to $1.67.
Analysts expect GILD’s revenue for the fiscal second quarter ending June 2023 to be $6.49 billion, indicating a 3.6% year-over-year growth. The company’s EPS is expected to increase 8.8% from the prior-year quarter to $1.72 in the same quarter. Additionally, it has topped consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 31.1% over the past year to close the last trading session at $81.11.
GILD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
GILD also has an A grade for Value and Growth and a B for Quality. It is ranked #2 of 399 stocks in the Biotech industry.
Click here to access additional ratings for GILD’s Stability, Sentiment, and Momentum.
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BMY shares were trading at $67.67 per share on Tuesday afternoon, down $1.23 (-1.79%). Year-to-date, BMY has declined -5.20%, versus a 4.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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