Millions Use Drugs

It pays to keep a close watch on your health care investments. Yesterday, the price per share for ABBV dropped from $121 per share to $106.10 per share. I saw that drop and bought another 100 shares that are not reflected in today’s graph. I paid $107.99 per share for the investment and by the end of the day the shares were back up to $112.27. I also sold a covered call on the shares, further increasing my profit potential.

Top Five Health Care Investments

Today our combined investment accounts hold PFE, ABBV, MRK, ANTM, and GILD as our top five health care investments. This does not include our investments in MPW or CTRE, which are REITs. If you were to look at the businesses, you would find that they are more different than similar. Although they are all focused on health care, PFE and MRK are classified as Pharmaceuticals, ABBV and GILD are Biotechnology and ANTM is Managed Health Care. As with my technology top five in yesterday’s post, there is diversification within the sector.

iPhone Dividend Tracker app view of all of our Fidelity Investments accounts.

Dividends and Growth

The top five health care investments also vary by dividend profile. However, all five have a dividend payout ratio within my desired range of 20-70%. They are on the low side, but this provides some dividend safety and opportunities for dividend growth.

Seeking Alpha Dividend Comparison as of SEPT 2, 2021.

Four of the five have a current yield above three percent, which is better than the health care top five. All of them have five or more years of consecutive dividend growth. None of these are growth investments. They are value dividend growth investments. I do not have automatic dividend reinvestment on for any of our holdings.

Top Five Ranking by Total Gain

A quick look at the gain from our original investment shows that both PFE and ABBV have grown the most in value. ANTM, GILD, and MRK have grown less, but I have held those shares for a shorter duration. Also, just like my tech investments, bear in mind that I sell covered call options on all of these positions, as they all have heavy options trading. This added gain isn’t apparent by looking at dividends or share appreciation. Options income flies under the radar, but it is very real.

2021 Options Income of $1,589 for the Top Five

Some of these are better than others for covered call income. While $1.5K is a decent addition to our income stream, the primary income from these investments is in the form of dividends. For example, Cindie and I own a combined total of 2,500 shares of PFE. The annualized dividend for PFE is $1.56 per share. That results in $3,900 in annual income.

You might not be able to buy 2,500 shares of PFE, but there was a day, long ago, that we couldn’t either. Back in the dark ages of investing we could only afford 100 shares, and we paid the broker a huge amount to buy the shares. Don’t forget that starting small doesn’t mean you shouldn’t start.

ETF Investments in Health Care

Although the focus of an ETF like VYM (Vanguard High Dividend Yield ETF) is not health care, almost 14% of the 400 companies in this ETF are in the health care sector. ETF SCHD is currently holding 12.8% in health care, and we own shares of SCHD. Even DGRO is 17.5% health care.

A recent ETF addition to my investment mix is QYLD (Global X Funds – Global X NASDAQ 100 Covered Call ETF). QYLD is only 7% health care, but it has a covered call options strategy.

Because of these broad ETF’s, our total exposure to health care is about 17% of our total investments. This is more than the broad index holds. We are overweight health care, real estate and financials.