How Gilead Sciences Has Maintained Its Dividend Trajectory
Gilead’s revenue and earnings in 2015 and 2016
Gilead Sciences’ (GILD) revenue rose 31% in 2015 before falling 7% in 2016. Revenue from the United States, Europe, Japan, and other countries drove revenue growth in 2015. US and European revenue fell in 2016. Product sales, royalty, contract, and other revenue rose in 2015 before falling in 2016.
The company’s costs and expenses rose 9% and 22% in 2015 and 2016, respectively. Income from operations rose 45% in 2015 before falling 21% in 2016, and interest expenses rose in both years. As a result, the company’s EPS (earnings per share) rose 62% in 2015 before falling 17% in 2016. Share buybacks enhanced its EPS.
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Gilead’s revenue and earnings in 1H17
Gilead Sciences’ revenue fell 12% in 1H17, due to a fall in product sales, royalty, contract, and other revenue. Its costs and expenses fell 12%, its income from operations fell 13%, and its interest expenses rose. Together, these developments translated into a 14% fall in the company’s EPS, which were enhanced by share buybacks.
Gilead’s dividend yield
Gilead’s 43% dividend-per-share growth in 2016 has been followed by 13% growth in 2017. Its stock price has risen slightly in 2017 after falling in 2016, translating into a flattened dividend yield curve. The company’s stock price has risen 2.6% YTD (year-to-date), compared with a 29% fall in 2016. Biotechnology stocks have managed some recovery in anticipation of some relaxation with respect to medicine pricing.
Gilead versus broad indexes
Gilead Sciences has a PE (price-to-earnings) ratio of 7.4x and a dividend yield of 2.8%, while the sector has an average PE ratio of 24.6x and dividend yield of 2.8%. The S&P 500 (SPX-INDEX) (SPY) offers a dividend yield of 2.3%, PE ratio of 22.6x, and YTD return of 15.6%. The Dow Jones Industrial Average (DJIA) (DIA) has a dividend yield of 2.3%, PE ratio of 21.1x, and YTD return of 19.1%. The NASDAQ (COMP-INDEX) (ONEQ) has a PE ratio of 25.3x and YTD return of 25.7%.
The Pacer Global Cash Cows Dividend ETF (GCOW), a dividend fund with exposure to Gilead Sciences, has 44% exposure to North America. Meanwhile, the First Trust Morningstar Dividend Leaders ETF (FDL) has 5% exposure to healthcare, a 3.2% dividend yield, and a PE ratio of 19.9x.