There are multiple reasons to consider exposure to pharmaceutical stocks for the long-term portfolio. First, pharma stocks have a low-beta and provide help in reducing the overall beta of a portfolio that’s overweight growth stocks. Further, pharma stock represents a business that’s relatively immune to economic shocks.
At the same time, well established pharma companies have healthy cash flows and therefore sustained value creation through dividends. With these factors in consideration, investors should look at undervalued pharma stocks for the portfolio.
This post appeared at Dividend Stocks Research.