Most investors are ignoring a clear shot at 7%+ dividends double-digit price gains—year in and year out—in a sector everyone should be talking about, but isn’t.
That would be healthcare, which is riding a rocket of rising spending: according to the latest numbers from the Centers for Medicare & Medicaid Services, US health expenditures will soar 5.4% annually, on average, every year until 2028. (We’ll dive into three funds paying huge dividends up to 8.3% and poised to cash in on this wave in a moment.)
The thing about that 5.4% yearly increase is that it’s much bigger than projected US GDP growth of 4%. Yet the market is behaving like healthcare is in its sickbed: pharma’s main benchmark ETF, the Health Care Select Sector SPDR ETF (XLV) XLV -0.9%, is trailing well behind the S&P 500 this year.
I’ve been pounding the table on this disconnect in my CEF Insider service for a while now. And CEF Insider members will of course know that we’ve taken advantage of rising healthcare demand with two closed-end funds (CEFs) throwing off 8.2%+ dividends—Tekla Life Sciences Investors (HQL) and Tekla Healthcare Investors (HQH).
Most investors are ignoring a clear shot at 7%+ dividends double-digit price gains—year in and year out—in a sector everyone should be talking about, but isn’t.
That would be healthcare, which is riding a rocket of rising spending: according to the latest numbers from the Centers for Medicare & Medicaid Services, US health expenditures will soar 5.4% annually, on average, every year until 2028. (We’ll dive into three funds paying huge dividends up to 8.3% and poised to cash in on this wave in a moment.)
The thing about that 5.4% yearly increase is that it’s much bigger than projected US GDP growth of 4%. Yet the market is behaving like healthcare is in its sickbed: pharma’s main benchmark ETF, the Health Care Select Sector SPDR ETF (XLV) XLV -0.9%, is trailing well behind the S&P 500 this year.
I’ve been pounding the table on this disconnect in my CEF Insider service for a while now. And CEF Insider members will of course know that we’ve taken advantage of rising healthcare demand with two closed-end funds (CEFs) throwing off 8.2%+ dividends—Tekla Life Sciences Investors (HQL) and Tekla Healthcare Investors (HQH).
HQH and HQL aren’t the only games in town, either. Here are three others that don’t currently sit in our CEF Insider portfolio but are still positioned to benefit from rising demand for healthcare. To make it easier for you to sift through them, I’ve ranked these three picks from worst to first:
Healthcare CEF #3: Tekla World Healthcare Fund (THW)
Our No. 3 pick, THW, also comes from Tekla, and it demonstrates how even terrific managers can have the odd strikeout every now and then.
THW catches attention mainly because of its 8.6% yield, which is big even for CEFs, whose average yield is an already large 6.8%. THW is a much more global fund than HQH or HQL (or the other two funds we’ll cover below), with top holdings such as AstraZeneca PLC (AZN), Roche Holding (RHHBY) and Medtronic MDT -5.5% (MDT).
Those are all great companies, but when it comes to pharma, we want to keep our focus on the US, which is the world’s biggest healthcare spender, with a forecast 35% share of global healthcare spending in2028, according to Statista.
