As stock price volatility has increased for big tech and semiconductor corporations that led global markets in the United States, Korea, and elsewhere in the first half of this year, dividend stocks that provide steady dividends are drawing attention again.
Dividends can partly cushion short-term stock price swings, and even if prices undergo a temporary correction, dividend income can be one pillar of investment revenue.
A representative high-dividend sector is global healthcare (pharmaceuticals and medical devices). In particular, global big pharma (large pharmaceutical companies) have steadily increased dividends on the back of stable earnings growth and are considered leading shareholder-return corporations.
According to the financial investment industry on the 31st, leading U.S. dividend exchange-traded funds (ETFs) have remained relatively resilient even as market volatility increased.
As of the previous day's tally, SCHD (Schwab U.S. Dividend Equity ETF), which invests in high-dividend blue chips, returned about 16.9% over the past six months and about 28.9% over 12 months. Another representative dividends ETF, VYM (Vanguard High Dividend Yield ETF), posted returns in the 10% range over six months, while VIG (Vanguard Dividend Appreciation ETF), focused on dividend growth stocks over the same period, was in the 8% range.
Major holdings include Abbott Laboratories, Johnson & Johnson, Merck (MSD), Bristol Myers Squibb (BMS), and AbbVie—large healthcare corporations.
According to the healthcare industry, major U.S. pharmaceutical and medical device companies are continuing shareholder-return policies by expanding dividends or steadily buying back shares. This is also a strategy to attract long-term investors.
Some corporations are regarded as "Dividend Aristocrats" or "Dividend Kings," having increased dividends for decades.
AbbVie of the United States, cited as a representative Dividend Aristocrat for expanding dividends over a long period, is maintaining a quarterly dividend this year of $1.73 per share. The stock price is also rebounding.
AbbVie's stock, about $224 on Jan. 2, fell to about $189.4 on Apr. 29 on concerns of slowing growth due to the patent expiration of blockbuster drug Humira, but then turned upward as expectations for earnings recovery were reflected. As of the close on the 28th, the stock was $265.56, up about 40% from the low.
Despite concerns over declining Humira sales, follow-on autoimmune disease drugs have maintained high growth and emerged as a new growth driver, which is cited as the backdrop for the stock's recovery. AbbVie is continuing to improve earnings this year, helped by the growth of these follow-on products.
Pfizer is undergoing an earnings adjustment after declines in COVID-19 vaccine and treatment sales, but is regarded as a leading pharmaceutical stock with strong dividend appeal. The current quarterly dividend is about $0.43 per share, with an annual dividend yield in the 6% range. It is securing growth drivers by expanding its oncology and vaccine portfolio.
Johnson & Johnson (J&J), which operates pharmaceutical and medical device businesses, is a representative Dividend King corporation. This year's quarterly dividend is $1.34 per share, marking 64 consecutive years of dividend increases. Starting at $205 in January, the company's stock closed at $267 on the 28th, up about 30% so far this year. J&J said in its second-quarter earnings announcement that it expects to surpass $100 billion (about 144.79 trillion won) in annual sales this year.
Amgen has also steadily increased dividends. This year's quarterly dividend is about $2.52 per share, and the company is continuing shareholder returns based on an expanding new drug portfolio and stable cash flow.
Merck (MSD) is securing strong cash generation centered on the immuno-oncology drug Keytruda and the pulmonary arterial hypertension (PAH) drug Winrevair (ingredient name sotatercept). The current quarterly dividend is $0.85 per share.
Last year alone, Keytruda generated $31.7 billion (about 48 trillion won) in global sales as a single product. However, with the expiration of Keytruda's composition patent approaching, the market is watching post-expiration growth strategies. Keytruda's composition patent expires in 2028 in Korea and is reportedly set to expire in 2029 and 2031 in the United States and Europe, respectively.
Bristol Myers Squibb (BMS) is considered a corporation with strong dividend appeal among large U.S. pharmaceutical companies. The current quarterly dividend is about $0.63 per share, with an annual dividend yield of around 4%. BMS guided full-year revenue of $46 billion to $47.5 billion (about 66 trillion won to 68 trillion won) and adjusted earnings per share (EPS) of $6.05 to $6.35 for this year.
AbbVie, J&J, and MSD have combined dividends with share buybacks. Share repurchases reduce the number of shares outstanding and increase earnings per share (EPS), making them a representative shareholder-return policy.
Eli Lilly and Company, which leads the obesity drug market, is highlighted more for growth potential than dividends. The current quarterly dividend is about $1.74 per share, but the dividend yield is under 1% due to the stock's rise. Expanded sales of Mounjaro and zepbound and development of the next-generation obesity drug retatrutide are expected to drive future earnings growth.
Danish drugmaker Novo Nordisk pays dividends twice a year. It has strengthened cash generation on the back of diabetes and obesity treatments Ozempic and Wegovy.
Korean pharmaceutical and biotech corporations are also strengthening shareholder-return policies by combining dividends with share buybacks and cancellations.
In particular, Samjin Pharmaceutical(005500) and Huons(243070) are drawing attention for high dividend yields. Samjin Pharmaceutical recently paid a dividend of 800 won per share, with a dividend yield of about 4.5%. Huons is also paying dividends of about 1,120 won per share, recording a dividend yield in the 4% range.
Myung In Pharm(317450) has strengthened shareholder returns since listing on the KOSPI last year. Based on the recent settlement of account dividend, the payout was 1,500 won per share, and the company expanded returns by additionally deciding an interim dividend of 500 won per share this year.
GC녹십자 recently paid 1,500 won per share, Yuhan(000100) about 600 won, and Hanmi Pharmaceutical(128940) 1,000 won per share in dividends.
Celltrion(068270) canceled 488,977 treasury shares this year, worth about 100 billion won. By canceling treasury shares, the number of shares outstanding decreases, which can be expected to boost earnings per share (EPS) and per-share value. The company plans to additionally buy 100 billion won worth of treasury shares and cancel them all within the year. If all plans are completed, cumulative treasury share cancellations this year will reach about 200 billion won. Celltrion canceled about 18.56 million shares cumulatively over the past three years.
Securities analysts advise approaching dividend stocks from a long-term holding perspective rather than short-term trading. It is important to select corporations that have growth potential in follow-on pipelines and R&D, rather than simply those with high dividend yields. If earnings deterioration continues, there is a possibility of a greater stock price decline and dividend cuts.
Hong Chun-uk, head of Prism Investment Advisory, said, "Rather than investing only by looking at the dividend amount, you should consider earnings, free cash flow, and the sustainability of dividends together."