Three drug stocks, three ways to boost their value. Pfizer is upping its dividend. GlaxoSmithKline is considering a stock buyback. Baxter International is embarking on its own buyback plan on top of a recent dividend hike. And no wonder, given the performance of drug stocks over the past decade; as In the Pipeline points out, the entire sector's shares stand below their value at the beginning of 2001.
First, Pfizer is raising its quarterly dividend by 11 percent, to 20 cents per share. Deutsche Bank analyst Barbara Ryan predicts that the dividend will continue to rise by about 10 percent a year through 2013, Bloomberg reports. Pfizer's shares fell 27 percent during the tenure of recently departed CEO Jeffrey Kindler--but then again, many pharma stocks performed no better. Over the weekend, Barron's advised Pfizer to boost its shares by hiking its dividend and buying back shares, too.
Second, GSK is thinking about returning cash to shareholders, CEO Andrew Witty tells Reuters. The company has cash on hand that it's been holding in anticipation of making new deals, but it expects dealmaking to fall off somewhat. So the company is moving toward the point where a share buyback could be in the offing.
Finally, Baxter says its board has approved a $2.5 billion share repurchase plan. And the company already has some $600 million remaining from a program approved in July 2009. The company also hiked its quarterly dividend by 7 percent. So it's going at the share price from both directions.