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Health Care Select Sector SPDR ETF: Consistent Dividend Growth And Better Growth Profile Than The S&P 500

Published Wed, 20 May 2020 12:32:08 -0400 on Seeking Alpha

XLV owns a portfolio of large-cap healthcare stocks in the U.S.
Many stocks in XLV’s portfolio have consistently increased their dividends in the past 10 years.
XLV is overvalued but it has a better growth profile than the S&P 500 Index.
ETF Overview
The Health Care Select Sector SPDR ETF (XLV) owns a portfolio of large-cap healthcare stocks in the S&P 500 Index. The ETF is a nice defensive choice as demands for treatment and healthcare services do not diminish even in an economic recession. Many stocks in XLV’s portfolio have consistently increased their dividends in the past and should be able to continue to grow their dividends in the future. XLV should also benefit from an ageing population in the world. It also has a better growth profile than the S&P 500 Index. Although XLV is overvalued when compared to its historical average, we believe XLV is still a good investment choice for investors with a long-term investment horizon.
Data by YCharts
Fund Analysis
Stocks in XLV’s portfolio are recession-resilient stocks
The healthcare industry is a nice sector to invest due to its recession-resilient businesses because there will always be people that will need medical treatment and care regardless of an economic recession. These stocks will also benefit from an ageing population. According to a report by the United Nations, the number of people aged 60 years or older will double by 2050 from the current level today (see chart below). Therefore, we expect the need for drugs, medical equipment, and care to continue to grow rapidly in the next few decades.

Source: United Nations
Stocks in XLV’s portfolio have consistently increased their dividends every year
Stocks in XLV’s portfolio are dividend stocks. Since the healthcare industry is a recession-resilient industry, we think most of the companies’ dividends are safe in a recessionary environment today. Below is a chart that shows the dividend history of... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ABBVIE 70.83   26.0 2.72 4.28 6.28
PFIZER 37.28   17.0 2.19 1.44 3.85
BRISTOL-MYERS SQUIBB 49.61   13.1 3.80 1.64 3.38
AMGEN 194.00   15.4 12.62 5.80 2.95
JOHNSON & JOHNSON 130.43   21.6 6.03 3.80 2.93
MERCK & CO 83.31   23.3 3.57 2.20 2.69
ELI LILLY 111.47   14.0 7.97 2.58 2.32
UNITEDHEALTH GROUP 230.10   17.3 13.32 4.32 1.86
ABBOTT LABORATORIES 85.21   52.3 1.63 1.28 1.54
THERMO FISHER SCIENTIFIC 294.97   33.6 8.77 0.76 0.26

ABBVIE - ABBV
ABBVIE - ABBV  


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