Smart Dividend Portfolio Edition #66: Biopharma Riches
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Dear Investor,
Welcome to the 66th edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: Jun 23, 2025
Stocks closed mixed on Friday amid (subsequently dashed) hopes for de-escalation in the Middle East, still clocking in a second straight week in the red. Despite eking out a small increase on the last trading day of the holiday-shortened week, the Dow Jones Industrial Average (DJIA) ended the weekly session down 1.77%, returning to a year-to-date loss. Meanwhile, the S&P 500 (SPX) fell 1.28%, and the tech-heavy Nasdaq-100 (NDX) lost 1.31% for the week, with both benchmarks still in the green for the year.
Stock markets were moved by geopolitical news during the week, and major developments over the weekend indicate this will continue to be the case going forward. In addition, the Federal Reserve’s policy meeting adding a significant macro highlight. Last week opened positively as fears of all-out Mideast war eased, after which the rally crumbled – and crude resumed its climb – as Tehran threatened escalation and former President Donald Trump demanded “total surrender.”
After Thursday’s Juneteenth closure, investors returned on Friday, hoping for the best, but stocks lost ground throughout the day on another bout of trade news. The declines were led by semiconductor and chip equipment stocks, which fell after The Wall Street Journal reported that the U.S. plans to cancel the blanket waivers that allow international chip companies like Samsung, SK Hynix , and TSMC to easily send American chipmaking equipment to their factories in China.
Wednesday’s Fed interest rate decision brought no surprises, as the central bank kept rates unchanged, noting that uncertainty “has diminished but remains elevated.” Fed Chair Jerome Powell noted that “the economy is in a solid position,” and the Fed is well-positioned to provide a timely response to any economic developments.
The Fed’s “Dot Plot” also remained unchanged, as policymakers still expect two rate cuts this year. However, expectations for inflation and unemployment by the end of 2025 both rose, while projections for GDP growth declined, underscoring the Fed’s difficulties in establishing monetary policy amid contrasting economic crosscurrents and elevated geopolitical risks.
Meanwhile, economic data appear to be confirming the Fed’s view of a gradually softening economy. Retail sales fell for a second straight month in May, declining by the most so far in 2025 and marking the first back-to-back monthly decline since the end of 2023. Industrial production declined again, and the NAHB homebuilder confidence index slumped to its lowest since the end of 2022, while new home construction dropped to the lowest level since 2020.
This and other data, coupled with the Fed’s updated economic projections, might keep “stagflation” in the headlines. Saturday’s news that the U.S. had struck Iran’s nuclear facilities set the stage for a further rise in oil prices, adding short-term inflationary pressures and weighing on investor risk appetite. Markets remain wedged between escalating global risk and weakening fundamentals, with Fed policy constrained, volatility high, and few near-term catalysts to shift sentiment decisively.
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This Week’s Quality Dividend Stock Idea
Gilead Sciences (GILD) is a leading global biopharmaceutical company focused on advancing innovative medicines for life-threatening diseases. The company develops and markets treatments across key therapeutic areas, including antiviral, oncology, and inflammatory diseases. With a diverse portfolio of groundbreaking therapies, Gilead serves patients worldwide, improving care for conditions such as HIV, viral hepatitis, COVID-19, and various cancers. Backed by strong scientific expertise and decades of research leadership, the company continues to evolve through strategic partnerships, pipeline innovation, and global expansion.
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Therapeutic Trailblazer
Founded in 1987 in Foster City, California, Gilead Sciences began as a small biotechnology firm focused on antiviral drug discovery. Early breakthroughs in HIV treatment established the company’s strong foundation in virology. The 2003 acquisition of Triangle Pharmaceuticals further strengthened Gilead’s HIV pipeline, expanding its product portfolio and revenue potential.
Throughout the 2000s, Gilead broadened its focus to hepatitis therapeutics, launching groundbreaking treatments for hepatitis B and C. Blockbuster drugs such as Viread, Harvoni, and Epclusa drove significant earnings growth and cemented Gilead’s leadership in liver disease. The $11.2 billion acquisition of Pharmasset in late 2011 – closed in January 2012 – brought sofosbuvir, marketed as Sovaldi and later incorporated into Harvoni and Epclusa, which revolutionized hepatitis C treatment and triggered a new wave of global revenue expansion.
Gilead has subsequently deepened its liver disease portfolio through strategic acquisitions. In 2020, it acquired MYR GmbH for nearly $1.7 billion, securing Hepcludex for hepatitis delta virus. In 2024, the company added seladelpar through its $4.3 billion acquisition of CymaBay Therapeutics, bolstering its presence in primary biliary cholangitis, a chronic autoimmune liver disease.
The company’s expansion into oncology began in 2017 with the $11.9 billion acquisition of Kite Pharma, adding CAR T-cell therapies to its pipeline, including Yescarta, a key treatment for lymphoma. In 2020, GILD accelerated its oncology growth with two major deals: the $4.9 billion acquisition of Forty-Seven, which brought magrolimab, a first-in-class CD47-targeted antibody, and the $21 billion acquisition of Immunomedics, adding Trodelvy, an FDA-approved antibody-drug conjugate for metastatic triple-negative breast cancer. That momentum continued in 2023 when Kite acquired Tmunity Therapeutics, expanding Gilead’s capabilities in both cancer and autoimmune cell therapies.
Parallel to its oncology push, Gilead has steadily built out its presence in inflammation and autoimmune disease. The 2022 acquisition of MiroBio for $405 million added checkpoint receptor programs in immunology. In 2023, it acquired XinThera, a private biotech focused on small-molecule inhibitors for oncology and inflammation. Most recently, Gilead formed a strategic partnership with LEO Pharma, gaining global rights to develop, manufacture, and commercialize oral STAT6 inhibitors and protein degraders for inflammatory diseases (excluding topical dermatology), with a $250 million upfront payment and up to $1.7 billion in milestones and royalties.
Gilead now operates globally with a broad, diversified portfolio spanning virology, oncology, liver disease, autoimmune disorders, and inflammation. Through a combination of internal innovation, strategic acquisitions, and partnerships, the company has built a resilient, evolving business model that continues to drive long-term earnings growth.
Today, Gilead has a market capitalization of $135 billion with annual revenues of nearly $29 billion and is ranked #149 on the Fortune 500 list.
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Virology Strength
Gilead Sciences is a global biopharmaceutical leader that discovers, develops, and commercializes innovative medicines across virology, oncology, and liver disease. Operating in more than 35 countries, the company leverages a broad portfolio of differentiated therapies with strong patent protection and established market leadership.
GILD’s core revenue driver remains its HIV franchise, led by Biktarvy – the world’s top-selling HIV therapy – with a 51% market share in the U.S, along with other single-tablet regimens such as Descovy, Genvoya, and Odefsey. This segment provides stable, recurring revenues, supported by strong patient adherence and growing use in pre-exposure prophylaxis1 (PrEP).
In Q1, HIV treatment sales rose by 5% year-over-year to $4.55 billion, driven by higher demand and an increase in average realized price,2 aided by changes in the U.S. Medicare Part D program. Descovy sales surged 38% to $586 million, driven by higher demand and pricing, highlighting strong market positioning.
The recent U.S. FDA approval of lenacapavir for PrEP marks a major milestone. As a twice-yearly injectable, lenacapavir offers transformative potential in HIV prevention, improving adherence and expanding market reach, especially among underserved populations. The company is preparing for a rapid commercial rollout in the United States, with expectations to achieve about 75% access (availability through clinics, providers, and insurance coverage) within the first six months, and up to 90% access at 12 months.
Looking ahead, the 2025 Medicare Part D redesign – which caps annual out-of-pocket drug costs at $2,000 – is expected to create short-term turbulence in pricing and access. While patients will pay less, private insurers will bear a greater share of drug costs after the cap is reached. In response, insurers are likely to seek deeper discounts from drugmakers and tighten formulary access. Revised reimbursement schedules may also affect prescription timing and refill patterns in the near term.
As a result, GILD anticipates that HIV sales will remain flat in 2025 as the market adapts to the new structure. However, the company expects growth to resume in 2026 once the changes stabilize. Meanwhile, Gilead continues to monitor broader policy risks, including the possibility of U.S. HIV funding cuts, though no immediate shifts in policy are anticipated.
Gilead’s liver disease portfolio, including Epclusa, Vemlidy, and the newly launched Livtencity for primary biliary cholangitis (PBC), continues to diversify its virology revenues. This segment generated revenues of $758 million, up 3% year-over-year, excluding Veklury. This growth was driven by Livtencity’s launch and strong demand for hepatitis B and chronic hepatitis delta virus treatments in Europe.
Meanwhile, Veklury (remdesivir), used to treat COVID-19, remains a meaningful but gradually moderating revenue stream as pandemic-related hospitalizations decline. Veklury sales fell 45% year-over-year to $302 million in Q1, primarily due to decreased rates of COVID-19-related hospitalizations across all regions.
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1 – Pre-exposure prophylaxis (PrEP) is a preventive medical strategy in which people who do not have HIV but are at substantial risk of acquiring it take antiretroviral medication to reduce their risk of infection.
2 – Average realized price refers to the net amount pharmaceutical companies receive after discounts, rebates, and concessions, distinct from the list price or wholesale acquisition cost.
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Oncology Momentum
Gilead’s oncology segment anchored by Yescarta and Tecartus (cell therapies) and Trodelvy (an antibody-drug conjugate) – is a key growth area, though it currently faces competitive pressures. In Q1, sales declined 6% year-over-year to $757 million due to lower U.S. demand for cell therapies and pricing pressure, as rivals such as Novartis, Bristol Myers Squibb, and others introduced competing CAR T-cell (cell therapy) products. Despite this, GILD remains confident in its pipeline and partnerships, particularly with LEO Pharma, to retain market share in a sector projected to reach $117.5 billion by 2034 at a CAGR of 18.7% from 2025 to 2034.
Trodelvy is a bright spot, with clinical trials suggesting it could become a frontline therapy in triple-negative breast cancer, potentially doubling its addressable market. The drug also holds promise in other breast cancer subtypes and additional oncology indications. Oncology sales exceed $3 billion annually, with Trodelvy accounting for $1.1 billion in annual sales, growing at a double-digit pace.
Through its Kite subsidiary, Gilead remains a global leader CAR T-cell therapy, with over $2 billion in annual sales. Yescarta and Tecartus are core products, but future growth is expected from new candidates such as Anito-cel for multiple myeloma – a market approximately twice the size of lymphoma – with a potential launch in 2026. Kite’s manufacturing capabilities, offering industry-leading turnaround times, give it a competitive edge.
In parallel, the company is expanding into immunology and inflammation through novel drug candidates targeting alpha-4-beta-7, IRAK-4, and STAT6 – areas that could become new growth pillars in the 2030s. The company also earns royalty and revenue-sharing income from its partnerships and out-licensed intellectual property, contributing to earnings stability. GILD’s royalty revenues surged 37% year-over-year to $54 million in the first quarter.
Thanks to its U.S.-centric intellectual property (IP) structure, the company is less exposed to certain tariff-related risks compared to some of its peers. However, Gilead continues to advocate for policy approaches that foster innovation and avoid adding unnecessary costs to its operations or to the broader healthcare system.
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Resilient Performance
Gilead Sciences maintains a strong financial foundation, supported by market leadership in virology, expanding oncology revenues, and disciplined capital management. Over the past three years, the company has delivered steady performance, with revenue and EPS growing at a CAGR of 1.5% and 9.7%, respectively. This growth reflects the continued strength of its HIV and oncology portfolios, particularly Biktarvy and Trodelvy – along with progress in liver disease therapies, key pipeline advancements such as lenacapavir, and effective operational execution.
In the first quarter, GILD reported total revenues of $6.69 billion, flat year-over-year, as gains in HIV and liver disease sales offset declines in Veklury (remdesivir) and oncology revenues. While this result came in slightly below consensus expectations, product sales excluding Veklury rose 4% year-over-year to $6.3 billion.
The company returned to profitability with adjusted EPS of $1.81, reversing a year-ago loss of $1.32 and exceeding analyst estimates. Net income reached $1.3 billion, compared to a $4.2 billion loss in Q1 2024, which had been impacted by in-process R&D charges and impairments. Operating income also rebounded to $2.2 billion from a loss of $4.3 billion in the prior year, supported by normalized R&D spending and improved cost controls.
Operating cash flow was $1.76 billion, down from $2.18 billion in the prior year. The decline in operating cash flows was primarily due to higher income tax payments and inventory purchases. The company also repaid $1.8 billion of senior notes, underscoring strong cash flow discipline.
Gilead’s balance sheet remains healthy, with $7.9 billion in cash and equivalents as of March 31, 2025, while its adjusted debt-to-EBITDA ratio3 narrowed from 1.92x to 1.84x at quarter-end. Further highlighting its financial strength, GILD holds solid investment-grade credit ratings of “A3” from Moody’s and “A-” from S&P.
The company reaffirmed its full-year adjusted outlook, guiding for product sales of $28.4 billion at the midpoint and adjusted EPS of $7.90. Separately, GAAP EPS guidance was lowered to $5.85 at the midpoint, down from $6.15, reflecting higher expected costs of goods, SG&A expenses, and milestone-related charges. These items are excluded from adjusted results. Analysts currently forecast adjusted EPS of $7.95 on revenues of $28.7 billion, which is modestly above Gilead’s guidance.
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3 – GILD uses the adjusted debt-to-EBITDA ratio to gauge its ability to service debt from core operating earnings, excluding non-recurring or non-operational items. This offers a clearer view of ongoing earnings strength and debt capacity.
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Biotech Bounty
Gilead Sciences continues to prioritize shareholder value through a balanced capital return strategy that combines steady dividend growth with ongoing share repurchases. This approach is supported by the company’s strong free cash flow, ample liquidity, and a solid balance sheet. Return metrics also remain robust, with the company’s ROE, ROA, and ROIC ranked among the top of the industry, driven by consistent profitability, efficient asset utilization, and disciplined capital allocation.
Since initiating quarterly dividends in 2015, Gilead has consistently increased its payout over the past nine years, with dividends growing at a ~3.0% CAGR over the last five years. Analysts expect Gilead to continue increasing its payout at a rate of around 4% in the next several years.
The company currently distributes approximately 44% of its adjusted earnings to shareholders. In Q1 2025, GILD declared a quarterly dividend of $0.79 per share, up from $0.77 year-over- year, resulting in $1 billion in total dividend payments for the quarter. Its dividend yield stands at 2.92%, comfortably above the healthcare sector average of 1.75%.
Beyond dividends, Gilead actively returns capital through share repurchases. In Q1 2025, the company bought back $730 million worth of stock, while also spending an additional $176 million on share repurchases related to employee equity incentive plans. These buybacks reduced the share count, enhancing EPS accretion and capital efficiency.
Gilead’s stock has delivered a strong performance, surging more than 53% over the past year on the back of growth in its core businesses, pipeline progress, and operational efficiency. Despite this rally, GILD still trades at a nearly 15% discount to the sector median P/E ratio and sits in a moderate range on a price-to-cash flow basis. On a forward P/E GAAP basis, it trades at a 22.5% discount to the sector median, suggesting that an upside remains. Discounted cash flow models imply that Gilead shares may be undervalued by as much as 60%, providing further room for appreciation as fundamentals strengthen. Wall Street sentiment remains positive, with analysts forecasting an upside of nearly 10% over the next 12 months, and some analysts projecting as much as a 29% potential upside. The bullish outlook is underpinned by strong prospects for Gilead’s HIV portfolio, particularly Biktarvy, and the potential for significant revenue gains from the company’s move into next-generation PrEP treatments, which could add an estimated $3 billion in new revenue opportunities.
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Investing Takeaway
Gilead Sciences offers an appealing choice for dividend-focused investors, supported by its strong free cash flow and a disciplined capital return strategy. Since initiating payouts in 2015, the company has steadily increased dividends for nine consecutive years, reflecting a clear commitment to shareholder returns. With a current yield well above the healthcare sector average and a growing payout ratio, Gilead continues to demonstrate both the capacity and willingness to sustain and enhance its dividend stream. The company complements this with opportunistic share buybacks, further boosting shareholder value. Backed by a resilient earnings base, a healthy balance sheet, and solid investment-grade credit ratings, Gilead is well-positioned to deliver reliable, growing income over the long term. For income-oriented investors, GILD offers not only consistent dividends but also potential for capital appreciation, driven by a robust pipeline and continued leadership in virology and oncology.
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Dividend Investor Portfolio
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Portfolio News
▣ In a move that could benefit JPMorgan Chase (JPM), U.S. bank regulators plan to ease the enhanced supplementary leverage ratio (eSLR) for the largest lenders by up to 1.5 percentage points, aiming to reduce capital constraints on trading in the $29 trillion Treasuries market. The move would lower bank holding companies’ eSLR to 3.5%-4.5% from 5%, with similar reductions for banking subsidiaries. While intended to strengthen banks’ intermediary role, some experts warn the change may not spur more Treasury purchases and could increase financial risks.
Meanwhile, JPMorgan Chase is deepening its crypto push with JPMD, a stablecoin-like deposit token to be launched on Coinbase’s Base blockchain. The token, available only to institutional clients, offers 24/7 settlement and interest payments. In another major crypto development, the U.S. Senate passed the “GENIUS Act,” the first federal framework for U.S. dollar-pegged stablecoins. The bill, passed 68-30, mandates full reserves, monthly audits, and anti-money laundering compliance, while empowering Treasury Secretary Scott Bessent to oversee the market.
▣ Kroger (KR) reported mixed Q1 results, with adjusted EPS rising 4.2% to $1.49, beating estimates, while sales edged down 0.4% to $45.12 billion, slightly missing forecasts of $45.16 billion. Identical sales (excluding fuel) rose a strong 3.2%, up from 0.5% a year ago. Gross margin improved slightly to 23% from 22.4%, driven by the sale of Kroger Specialty Pharmacy, lower shrinkage, and reduced supply chain costs. The company booked a $100 million impairment charge tied to plans to close about 60 stores over the next 18 months, with savings earmarked for customer experience upgrades. Strong Pharmacy, eCommerce, and Fresh segment performance underpinned the quarter. Looking ahead, Kroger raised its FY25 identical sales (ex-fuel) growth outlook to 2.25%-3.25%, up from its prior forecast in the range of 2% to 3%. The retailer reaffirmed EPS guidance of $4.70 (midpoint), below consensus estimates of $4.76. It also projects $2.9 billion in adjusted free cash flow at midpoint and $3.6-$3.8 billion in capital spending.
▣ Phillip Morris’s (PM) ex-dividend date is set for June 23, and the dividend is scheduled to be paid on July 17.
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Recent Trades
None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.
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Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 3.97% | +6.64% | $6,009.10 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Sep 16, 2025 | Oct 02, 2025 | 2.46% | $6.16 |
| Amgen (AMGN) | Aug 18, 2025 | Sep 09, 2025 | 3.27% | $9.52 |
| BlackRock (BLK) | Sep 09, 2025 | Sep 23, 2025 | 2.61% | $20.84 |
| Bank of Nova Scotia (BNS) | Jul 02, 2025 | Jul 29, 2025 | 5.98% | $3.2 |
| EOG Resources (EOG) | Jul 17, 2025 | Jul 31, 2025 | 3.06% | $3.92 |
| ExxonMobil (XOM) | Aug 15, 2025 | Sep 10, 2025 | 3.64% | $3.96 |
| IBM (IBM) | Aug 11, 2025 | Sep 10, 2025 | 3.14% | $6.72 |
| JPMorgan Chase (JPM) | Jul 08, 2025 | Jul 31, 2025 | 3.2% | $5.60 |
| Kroger (KR) | Aug 15, 2025 | Sep 01, 2025 | 2.82% | $1.28 |
| LyondellBasell (LYB) | Aug 26, 2025 | Sep 03, 2025 | 5.74% | $5.48 |
| PepsiCo (PEP) | Sep 09, 2025 | Sep 30, 2025 | 3.64% | $5.44 |
| Philip Morris (PM) | Sep 25, 2025 | Jul 17, 2025 | 6.06% | $5.40 |
| Qualcomm (QCOM) | Sep 05, 2025 | Oct 09, 2025 | 2.36% | $3.56 |
| VICI Properties (VICI) | Sep 18, 2025 | Oct 06, 2025 | 5.22% | $1.73 |
| Verizon (VZ) | Jul 10, 2025 | Aug 05, 2025 | 6.09% | $2.71 |
NameEX-Dividend DatePayment DateYield on Cost Annual DPS
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
