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Dividend Stock Tips From a BlackRock Expert

By Ben Steverman - 2011-09-15T23:52:35Z

Illustration by Dennis Pacheco

9 of 15

Drugmakers' High Dividends

Drugmakers tend to have long records of paying high dividends. The S&P 500 Pharmaceuticals index has a dividend yield of 3.7 percent.

Shearer warns that the dividends of pharmaceutical companies may not be sustainable. From now until 2013, many drug patents expire, cutting off important sources of cash, he says. At the same time, company "pipelines are not very robust with new products right now." Drugmakers' cash flow could also be hurt by billions of dollars in payments required by federal health-care reform.

Shearer has reduced his drug holdings, though he still owns Merck (MRK) and Abbott Laboratories (ABT).

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