2 shares to buy in February for healthy dividends

The biotech sector is one of my favorites to invest in. Non-cyclical demand for medicines and the possibility of shareholders benefiting from exciting clinical breakthroughs are encouraging factors. Therefore, I think there are many dividend stocks to buy in this area of ​​the stock market that have the potential for good long-term returns.

Two pharma stocks I already own that I bought more of this month FTSE 100 constituents GSK (LSE: GSK) and S&P 500 constituents Johnson & Johnson (NYSE: JNJ).

Let’s take a look at each company’s prospects.

GSK

The change in GSK stock price for the last period is 0%. However, there are signs of recovery after strong earnings results. The stock currently yields 6.05%.

Climbing 13% year-on-year to £29.3bn, the company’s full-year sales exceeded expectations. I am particularly encouraged by the double-digit annual revenue growth across several divisions, including specialty drugs (+37%), oncology (+23%), and HIV (+20%).

Shareholders of the pharma brand can benefit from better margins. Expected 10-12% increase in operating profit and 12-15% increase in earnings per share (EPS). These figures add credibility to CEO Emma Walmsley’s claim that 2022 is a “landmark year district“for business.

In addition, passive income investors will note the company’s progressive dividend policy remains unchanged, guided by a payout ratio of 40-60%. The expected dividend of 56.5p per share makes it one of the highest performing FTSE 100 stocks in the sector.

The company faces the risk of competition, especially companies that invest heavily in mRNA technology, for example. Modern and Pfizer. Both businesses are targeting an RSV vaccine this year. Recently, Moderna announced that its vaccine candidate was 84% ​​effective in preventing symptoms in the elderly in a late-stage trial.

GSK has cited the potential of a new RSV vaccine as a growth area. Companies may face an uphill battle for market share. However, this stock looks attractive compared to my competitors, with a price-to-earnings ratio of just 4.15.

Johnson & Johnson

In the last month, the stock price of Johnson & Johnson changed to +4.5%. The dividend yield is 2.77 %.

The company is a true dividend aristocrat. It has enjoyed 59 years of dividend growth and missed a dividend payment in over a century. Although shareholder payouts are not guaranteed, this company’s dividend is almost guaranteed.

It is one of only two US companies with a AAA-credit rating, together Microsoft. This means there is a high risk of bankruptcy, even in a severe recession. The company has a strong drug pipeline and a diverse product mix. It makes vaccines, medical devices, and consumer health products.

Strong product demand makes Johnson & Johnson an inflation-resistant stock in my view. However, the company also faces an upcoming settlement with potentially billions of dollars in restitution payments.

More than 40,000 lawsuits have been filed alleging that the group’s talc powder products cause cancer. A US court recently blocked the business from using legal maneuvers to split the company and file for bankruptcy in the process, although Johnson & Johnson plans to appeal the decision.

Ongoing legal difficulties may limit share price growth. Despite the risks, the good history of good returns, strong balance sheet, and reliable dividend make this stock a buy for me.