Portfolio Manager Alex Ruehle of Denver Investments says Swiss pharmaceutical company Novartis AG (ADR) (NYSE:NVS) is where investors can find both income and stability, with dividends expected to grow nearly 16% over the next five years.
Novartis maintains strong competitive positions across several key therapeutic areas, providing meaningful cash generation and diversification to their business. These areas are branded pharmaceuticals, generic pharmaceuticals, eye care and consumer products.
The company controls one of the best product pipelines in all of the pharmaceutical industry, which is underappreciated by the market. In contrast with other pharmaceutical companies, they have relatively limited exposure to patent expirations.
Additionally, management has strived to create a nimble, small-company culture despite the size of the organization. This has enabled them to realize efficiencies and reduce management tiers. Currently, Novartis presents a 3.5% dividend yield, and our analysts forecast that their strong cash generation should support 16% dividend growth over the next five years.
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