Critical comments from the Democratic Party regarding high drug prices had placed a dark cloud above the health care sector. But the sector has rallied following Donald Trump's victory in the presidential election.
Some of the larger players in the sector are excellent income opportunities. With large drug pipelines and diverse market reach, companies such as AbbVie (ABBV) and GlaxoSmithKline (GSK) should be able to pay nice yields for years to come.
Drug company AbbVie is one of the larger industry players, with a market cap of $96.37 billion and 28,000 employees. Its recent success is due in part to sales of Humira, a treatment for severe, chronic psoriasis.
AbbVie, based in Chicago, expects that Humira will continue to drive revenue growth for the foreseeable future, along with hepatitis C treatments Viekira Pak and Technivie. However, analysts worry the company will not meet sales expectations in 2017 once the Humira patent expires and it must compete with generic versions of the drug.
Although Humira does account for 58% of AbbVie's revenue, the drugmaker is no one-trick pony. Sales of Imbruvica, used to treat blood cancers, have been growing steadily, and the pace should pick up thanks to the Food and Drug Administration. In early March the FDA cleared Imbruvica for first-line use in treating chronic lymphocytic leukemia, whereas previously patients had to have undergone at least one prior therapy before using the drug.
That potential revenue growth means AbbVie's dividend should continue rising. Since AbbVie became an independent company nearly four years ago, the dividend has been growing, and the yield is currently 4.2%. Although you can find better yields in the sector, few come from health care companies that have grown as consistently as AbbVie or are as attractively valued as the drugmaker is now.