Viatris (VTRS) is a generic drug manufacturer that offers a dividend yield close to 3.4% — and it’s only offered a dividend for less than nine months.
Wary investors should have little fear, however, because the company has an impressive history of dividends since its 2020 formation via a merger of Pfizer’s Upjohn and Mylan units.
We must also mention that the company’s stock performance has been a bit dull, including a 28% drop in shares in 2021 as the overall market boomed. Wall Street is taking a bullish approach to the stock, estimating it will soar 50% this year but recent market performance puts that in doubt.
In the long term, it’s not likely that Viatris will generate outlandish returns. But, Viatris should be able to provide investors with moderate growth and solid dividends. It also has the potential to act as a safe haven for investors during periods of market volatility.
Viatris is expecting revenue this year to range from $17.0 billion to $17.5 billion.
Pfizer (PFE)
With arguably the best Covid-19 vaccine on the market, it’s easy to see why investors are rushing to invest in Pfizer. Then, there’s the fact that its dividend yield is currently around 3.5%. What’s more, Pfizer has an abundance of cash flow to keep increasing its dividend rate.
Some investors are trepidatious when it comes to the reliability of looking out one year, given the uncertainty surrounding what will happen to vaccine requirements and sales beyond 2022. But, Pfizer’s stock presents an attractive valuation for a mature company through its price-to-earnings-growth (PEG) ratio. With five-year growth, Pfizer’s PEG ratio is just over 1.0.
Wall Street also believes Pfizer offers solid prospects when it comes to share price appreciation. In fact, the average analyst has raised their 12-month price target to an upside potential of around 30%.
Despite concerns over whether the company can keep growing if Covid is mitigated, the company’s growth prospects are likely better than even management is letting on. The company has recently announced a Covid pill that could accelerate the fight against the Covid-19 pandemic. S
ales of the Covid pill are projected to top $22 billion in 2022, but could be even higher than that. That’s in addition to an extra $54 billion expected for vaccine sales.
Dr. Albert Bourla, Chairman and Chief Executive Officer, stated, “These successes have not only made a positive difference in the world, but I believe they have fundamentally changed Pfizer and its culture forever.”
In 2022, Pfizer plans to make 120 million courses of Paxlovid (the Covid-19 pill). Paxlovid is available for people who:
- Have tested positive for Covid-19 without hospitalization.
- Are at a heightened risk for developing severe Covid
- Are at least 12 years old (or 88 lbs)
Mixed results from the 4th quarter of 2021 as sales fell below and earnings above Wall Street estimates led to Pfizer’s stock to fall 8% in February 2022, making now the perfect time to get some Pfizer shares on the cheap.
Verizon Communications (VZ)
Verizon stock has long been sought after by investors seeking income. After all, the company’s dividend yield has topped 4% for the majority of the 21st century. Currently, the dividend yields nearly 5%. VZ is also valued quite attractively, with shares trading at less than ten times their expected earnings.
Some investors may prefer to do valuation metrics via EV or enterprise value. VZ’s EV is less than 8.2 times EBITDA, or “before interest, taxes, depreciation, and amortization.”
In terms of price appreciation, Wall Street’s 12-month price target for VZ is about 13% higher than its current share price.
Even in the midst of stock market volatility, VZ has still managed to climb 4% in 2022. The stock also looks strong in the long-term due to the increasing number of 5G, home internet, and mobile device users.
Another thing that’s fueling growth at Verizon is the November 2021 $6.25 billion Tracfone acquisition. Verizon acquired Tracfone from Mexican-based company America Movil, which sells pre-paid wireless services.
More growth will come from Verizon’s streaming partnership with Walt Disney. Last year, the partnership expanded its offerings to include Hulu, Discovery, and ESPN+.VZ also has a partnership with Apple Music and sports leagues.
In a note to clients, Raymond James analyst Frank Louthan said, “With 74% of new subs taking some form of unlimited plans and 33% of the base now on Unlimited Premium, combined with the push to bolt-on fixed wireless broadband, we believe Verizon can maintain a similar ad profile in 2022.”
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