BB Biotech offers the best of both worlds
Investing in biotechnology and enjoying dividends has long been regarded as a contradiction in terms - but that's not the case for those buying into the BB Biotech AG. This long-established investment trust manages to combine fast growth with a high dividend through exposure to the rapidly developing biotech sector. And in 2016 a dividend of CHF 14.50 per share will be paid, representing an increase of 25% versus last year and the fourth consecutive annual increase. This corresponds to a dividend yield of 5%*.
High growth doesn't preclude high dividends
With just seven out of 200 stocks in the Nasdaq Biotechnology Index paying dividends, investors have traditionally had to choose between dividends or growth. With the biotech sector growing in the double-digits, BB Biotech will be paying CHF 14.50 from paid-in capital reserves and retained earnings this year. This corresponds to a return of 5% based on the average share price in December 2015, which represents an increase of 25% from the previous year. This 5% dividend yield puts BB Biotech in the top quartile compared to the dividend yields offered by FTSE 100 companies.
It also ranks among the top performers in comparison to stocks in Germany's DAX index and is in the top 100 of the Stoxx Europe 600, when measured against the dividend yields. BB Biotech is also conducting continual share buybacks of up to 5% of share capital per annum, so that its payout policy, introduced in 2013, gives shareholders an annual return of up to 10%.
The outlook
When you consider that we're stuck in a low interest rate environment that means conventional savings accounts are offering very little, it's easy to understand why the lure of dividend yields is getting stronger and stronger - and biotechnology exposure is definitely worth considering. This sector was actually one of the standout performers of 2015 - in spite of the stock market environment - with the Nasdaq Biotechnology Index (NBI) advancing more than 11% (in USD), while the broad European and US stock markets could only manage single-digit upticks. The strong performance was credited to new product approvals, positive clinical trial data, strong corporate results and ongoing M&A. Rising global healthcare spending, new therapies due to innovative drugs, and capital inflows due to patent cliff are among the reasons to feel positive about the future, while BB Biotech shareholders are set to benefit from exposure to promising, fast growing and profitable stocks. The portfolio consists of established, attractively valued and profitable companies as well as innovation-focused midcap companies. With this diversity BB Biotech is able to capture many of the important value-creating sector milestones in the next future.
*Based on the distribution from paid-in capital reserves and retained earnings of CHF 14.50 per share; return calculated on the weighted average share price in December 2015. Proposal to the General Meeting on March 17, 2016, record date March 22, 2016.
**Calculations based on share prices at the time the dividend was distributed in 2015.
Source: Bloomberg
Disclaimer
This advertisement is issued by Bellevue Advisers LLP. Bellevue Advisers LLP is an appointed representative of Mirabella Advisers LLP, which is authorised and regulated by the Financial Conduct Authority. This advertisement is directed at professional clients and eligible counterparties as defined by the FCA in the UK only and should not be distributed to, or relied upon by persons not having professional experience in matters relating to investments, and neither Bellevue Advisers LLP nor BB Biotech AG will engage in investment activity with any such persons. This material is not intended as an offer or solicitation for the purchase or sale of shares of BB Biotech AG. Opinions and estimates constitute the judgement of Bellevue Asset Management and BB Biotech AG and are subject to change without notice. Past performance is not indicative of future results. This material may not be distributed within the United States or any other country where it may violate applicable law. Information herein is believed to be reliable, but neither Bellevue Asset Management nor BB Biotech AG guarantee its completeness or accuracy. BB Biotech AG is listed on the SIX Swiss Exchange (BION.SW), the Frankfurt Stock Exchange (BBZA.GY) and the Italian Stock Exchange (BB.IM).
