I read an article titled “7 Companies Paying Large Dividends That Are Fully Covered by Earnings” by The Manual of Ideas. It mentioned a drug company named AstraZeneca which produces several billion dollar drugs. I haven’t written much on pharmaceutical companies so I thought I’d take a first look at AstraZeneca (AZN).
Here is the excerpt from the article:
AstraZeneca (AZN) ($50 per share; MV $68 billion; EV $65 billion) is a major pharma firm that develops cardiovascular, gastrointestinal, infection, neuroscience, oncology and respiratory and inflammation medicines. It had ten drugs with annual sales of $1+ billion in 2010, including Crestor, Nexium, and Seroquel. Crestor sales rose 26% from $4.5 billion in 2009 to $5.7 billion in 2010, while total revenue increased 1% to $33.3 billion in the period. The Street expects AstraZeneca to earn $7.17 per share in 2011 (7x P/E), followed by $6.07 (8x) and $5.97 (8x) in subsequent years. The annualized dividend of $3.00 per share, an increase of 18% from a year ago, implies a yield of 6.0%. AstraZeneca has boosted the dividend six times in seven years, delivering an annualized growth rate of 18% for the period. AstraZeneca has a high-return business, with a seven-year average return on equity of 36%.
Here is the link to the original article http://seekingalpha.com/article/278778-7-companies-paying-large-dividends-that-are-fully-covered-by-earnings
AstraZeneca (AZN)
Market price: $49.34
Shares: 1.37 billion
Market capitalization: $67.40 billion
Dividend record: AZN pays dividends twice a year usually in February and August. The February dividend is usually 2-3 times larger than the August dividend. Here is the last five years of dividend payments:
Date Dividend Yield at that time
2/2/11 $1.85 3.88%
8/4/11 $0.70 1.33%
2/3/10 $1.71 3.97%
8/5/09 $0.59 1.26%
2/4/09 $1.50 3.92%
8/6/08 $0.55 1.11%
2/7/08 $1.35 3.55%
8/?/07 none? None?
2/7/07 $1.23 2.16%
8/9/06 $0.49 0.81%
Dividend: $1.85 + at least $0.70 = $2.55 or greater
Dividend yield: 5.1% estimated
EPS (trailing twelve months): $5.72
Dividend payout ratio: 46% ($2.55/$5.72)
Earning power: $4.86 @ 1.37 billion shares
EPS Net inc. Adj. EPS
2006 $3.85 $6,043 M $4.41
2007 $3.73 $5,595 M $4.08
2008 $4.20 $6,101 M $4.45
2009 $5.19 $7,521 M $5.49
2010 $5.57 $8,053 M $4.86
Five year average EPS $4.86
Consider buying at or below $58.34 (below 12x average earnings)
Consider selling at or above $97.20 (above 20x average earnings)
Balance sheet: looks pretty strong
Book value per share: $15.60
Price to book value: 3.18 (so-so)
Current ratio: 1.47 (above 2.0 is good)
Quick ratio: 1.35 (above 1.0 is good)
Conclusion: high dividend stock with growth potential, $4.86 average earnings @ 1.37 billion share, good balance sheet. This high dividend stock is value priced. I haven’t read all the earning releases and annual reports. I will investigate further. This company could join Safe Bulkers (SB) on the best dividend stocks list.
Disclosure: I don’t own AstraZeneca (AZN).
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