ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Alternatives Channel
      • Artificial Intelligence
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Education
      • ETF Investing
      • ETF Strategist
      • Faith-Based Investing
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Invest Beyond Cash
      • Leveraged & Inverse
      • Modern Alpha
      • Portfolio Strategies
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Gold/Silver/Critical Materials
        • Crypytocurrency
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
    • Market Outlook
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Indexes
    • Scenario Analysis
    • Watchlists
    • Head-To-Head ETF Comparison Tool
    • Mutual Fund To ETF Converter
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • Gaining Perspective Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Beyond Basic Beta Channel
  2. Weighing the Strength of Biotech Dividends With BBH
Beyond Basic Beta Channel
Share

Weighing the Strength of Biotech Dividends With BBH

Tom LydonOct 21, 2022
2022-10-21

Biotechnology usually isn’t the first industry investors think of when it comes to dividends, but some of the more mature companies in the space do deliver payouts. Some of those names reside in the VanEck Vectors Biotech ETF (BBH B-).

Among biotech exchange traded funds, BBH has one of the more focused lineups, but when it comes to dividends, that works in investors’ favor because BBH’s large cap-heavy portfolio isn’t significantly diluted by smaller, non-dividend paying names.

The $431.1 million BBH, which tracks the MVIS US Listed Biotech 25 Index, sports a dividend yield of 0.28%. That’s not eye-popping, but it implies some level of safety. Speaking of payout safety, some market observers are discussing just that following the passage of the Inflation Reduction Act. That legislation paves the way for Medicare to negotiate prices on select drugs with biopharma firms.

“In aggregate, this new legislation reduced our fair values by about 2%. So, it’s not a huge impact, but it is meaningful,” notes Morningstar healthcare analyst Damien Conover. “We did reduce on average about 2%, some firms a little bit more if they have more exposure to Medicare patients and a little bit less for others. So, in aggregate, a moderate impact that we think a lot of firms will be able to navigate around. It shouldn’t be a huge falloff on value, but a modest headwind.”

BBH is home to 25 stocks with Amgen (NASDAQ: AMGN) and Gilead Sciences (NASDAQ: GILD) combining for 24% of the ETF’s portfolio. Dow component Amgen sports a new impressive track record of dividend growth and a 3.13% dividend yield. Speaking of yield, Gilead yields 4.41% — well above what investors find with most bonds.

Broadly speaking, those companies and other dividend payers in the biotech space, including BBH components, aren’t necessarily vulnerable regarding payouts when it comes to the Inflation Reduction Act and that’s a plus for investors.

“The ability of these firms to pay the dividend is very, very strong and that largely has to do with this huge portfolio of drugs. So, even though some drugs will be losing exclusivity, new drugs will be launching, and that portfolio of diversification really enables strong dividend support. So, we don’t anticipate any dividend cuts for the large biopharma industry,” added Conover.

The worst-case scenario could be slower payout growth, but biopharma firms still offer solid earnings growth, which can support increasing dividends.

For more news, information, and strategy, visit the Beyond Basic Beta Channel.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2025 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X