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One sector that has recovered nicely this year after a miserable 2016 is pharmaceuticals. The failure of major health care reform seems to have helped the group. In addition, selected companies are benefiting from attractive product pipelines, says Chuck Carlson, editor of DRIP Investor.

A number of drug stocks provide attractive options for DRIP investors. One especially strong performer is Amgen (AMGN), which has been buoyed by an intriguing drug pipeline. One potential blockbuster is a migraine drug that could be approved in 2018.

Amgen recently received FDA approval for the first “biosimilar” cancer treatment. With a yield of well over 2%, the stock offers one of the best combinations of growth and income in the drug sector.

Please note Amgen offers a traditional dividend reinvestment plan that requires ownership of at least one share — and the stock must be registered in the name of the investor, not in “street” name — in order to enroll.

Two additional drug stocks that have been long-time favorites of mine are Bristol-Myers Squibb (BMY) and Denmark-based Novo Nordisk (NVO). Both stocks have enjoyed big rebounds after falling sharply in late 2016 and early 2017, with both now trading near 52-week highs.

Both stocks are still well below levels of previous years, so I think there is further upside. And both offer decent yields — Bristol-Myers yields 2.5%, while Novo Nordisk yields 2.0%. The stocks have a history of above-average volatility, so investors should be on the watch for good entry points, especially if the broad market pulls back.

Both Bristol-Myers Squibb and Novo Nordisk offer direct-purchase plans whereby any investor can buy the first share and every share directly from the company. Both plans have a minimum initial investment of $250.

Chuck Carlson is the editor of DRIP Investor and CEO of Horizon Publishing.

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