The Top 10 Global Pharma Companies based on the revenue from their pharmaceutical segments are shown in the chart below. The world’s largest pharmaceutical company Connecticut, USA based giant Pfizer(PFE). Last year it had a revenue of about $54 billion. Switzerland-headquartered Roche(RHHBY) and Johnson&Johnson(JNJ) took the 2nd and 3rd ranks.
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Source: Who are the top 10 pharmaceutical companies in the world? (2019).Pro Clinical
Disclosure: No Positions
North American railroad stocks have performed very well so far this year. While the S&P 500 is up around 21% year-to-date, most of Class I railroads, with the exception of CSX, have shot up by over 26%. Canadian Pacific(CP) is the best of the group and has grown by over 34%. One reason CSX is lagging is that the railroad was a great winner last year. Regardless as I have discussed many this in this blog, railroads are one of the best sectors to own for the long term.
The following chart compares the returns of major railroads YTD:
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Note: The returns shown above are price returns only (excluding dividends)
Source: Yahoo Finance
From an income standpoint, railroads offer stable and growing dividends year after year. For example, Norfolk Southern(NSC) increased its quarterly dividends by 9% this week. Union Pacific(UNP) also announced a dividend increase of 10%. These rates are excellent raises indeed.
Related Stocks:
Disclosure: Long CSX, CNI, NSC and UNP
During periods of economic contractions some sectors perform well while others don’t. For instance, when the economy is in recession, sectors such as leisure, travel, consumer discretionary, luxury retail, etc. are adversely impacted as consumers cut back on spending on those items. On the other hand, consumer staples, energy and utility sectors remain stable during tough times since consumers still buy necessitates like toothpaste, soap, food, etc. Similarly the utility sector also offers stability during recessions since people still need electricity and gas to maintain their daily life.
The chart below shows how different sectors perform during recessions and expansions:
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Source: End-of-Cycle Management, Franklin Templeton
A few of the stocks from the sectors that outperform in recessions are listed below:
Disclosure: No positions
Dividends are an important factor to consider when calculating the total return of an equity investment. Though the dividend yield of a stock may be low in the range of 2 to 4%, over the long run the yield gets multiplied many times over due to the effect of compounding.
Many investors overlook the critical role dividends play especially in providing a cushion to a portfolio in adverse market conditions and amplifying returns when measured in years. For example, the S&P 500’s total return, which includes dividends, over the past two decades is more than double of the price return as shown in the chart below:
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Source: 3 reasons not to dump your dividends by Holly Framsted, Blackrock
The key takeaway is that ignoring dividends is a bad idea. Holding dividend stocks and reinvesting dividend payments received is an integral part of a well diversified portfolio that is more likely to generate a higher overall total return in the long run.
Related ETFs:
Disclosure: No positions