We came across a bullish thesis on Novartis AG (NVS) on Substack by Max Dividends. In this article, we will summarize the bulls’ thesis on NVS. Novartis AG (NVS)’s share was trading at $103.81 as of Nov 26th. NVS’s trailing and forward P/E were 18.12 and 12.67 respectively according to Yahoo Finance.
A pharmacy shelves stocked with pharmaceutical drugs awaiting distribution.
Novartis AG, a Swiss pharmaceutical giant, is a standout for investors seeking steady income streams with its reliable 2.34% dividend yield, which has been steadily increasing over the years. This yield is supported by a conservative payout ratio of just 28%, allowing the company to distribute dividends while retaining ample earnings for future growth. Novartis, formed in 1996 from the merger of Ciba-Geigy and Sandoz, remains a leader in the global healthcare sector, specializing in therapeutic areas like oncology, neuroscience, immunology, and cardiovascular diseases. The company’s medicines reach over 250 million people worldwide, solidifying its position as a healthcare powerhouse with a rich legacy.
Despite long-term sales stagnation, Novartis maintains strong operating profitability and earnings growth, ensuring its stability and good prospects for the future. The company has been increasing its dividends consistently, with an average growth rate of 4.26% over the past three years, outpacing inflation and providing investors with a growing income. Novartis’ business model is based on both innovation and sustainability, with its medicines contributing to global health improvements while its dividends are backed by a healthy financial structure.
In addition to its solid dividend payout, Novartis is undervalued by market standards, with a lower price-earnings ratio compared to its competitors and a dividend yield higher than its 10-year average. This makes it an attractive investment for long-term dividend investors. The company’s leadership, consistent profitability, and dividend growth, combined with its strong financial position and relatively low valuation, suggest that Novartis is well-positioned for both income generation and capital appreciation, offering a compelling case for inclusion in a dividend-focused portfolio.
Novartis AG (NVS) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held NVS at the end of the third quarter which was 30 in the previous quarter. While we acknowledge the risk and potential of NVS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.