Industry Overview - Drug pricing has become a significant pressure point for pharmaceutical companies in the U.S. as efforts to reduce consumer costs at pharmacies intensify [1] - The U.S. is the largest single market for drugmakers, with prices often nearly three times higher than in other developed countries, leading to a heavy reliance on American sales for revenue [2] - The Most Favored Nations pricing model proposed by Donald Trump aims to tie U.S. drug prices to the lowest levels paid by other wealthy countries, which could have a substantial impact on pharmaceutical companies' financials if widely implemented [3][4] Market Performance - The S&P 500 Health Care sector has increased by over 13% this year, with health-care companies leading in earnings beats during the third quarter of 2025, marking the strongest performance in over four years [5] - Analysts suggest that as drug pricing uncertainty begins to ease, attention will shift to how pharmaceutical companies adapt to the changing landscape [5] Company Highlights Viatris Inc. (NASDAQ:VTRS) - Viatris has a dividend yield of 3.87% and is among the best dividend stocks in the pharmaceutical sector [11] - Barclays initiated coverage of Viatris with an Overweight rating and a $15 price target, noting improving investor sentiment and easing pricing pressure [12] - Viatris announced a deal to sell its equity stake in Biocon Biologics for $815 million, which includes $400 million in cash and $415 million in equity shares, aimed at enhancing its portfolio and market access [13] Gilead Sciences, Inc. (NASDAQ:GILD) - Gilead has a dividend yield of 2.54% and is recognized as a strong dividend stock [15] - The company entered a three-year agreement with the U.S. government to lower drug costs, reinforcing its commitment to U.S. innovation and affordability [16] - Gilead plans to invest $32 billion in U.S.-based manufacturing and R&D over the next five years, expecting to generate $43 billion in economic value and create over 3,000 jobs [17] Amgen Inc. (NASDAQ:AMGN) - Amgen has a dividend yield of 3.05% and has outperformed the broader market, with its stock up more than 27% since the start of 2025 [19] - The company reported a 12% revenue increase to $9.6 billion in the third quarter, driven by strong sales of key products like Repatha and Tezspire, both up 40% year-over-year [20] - Amgen has consistently raised its dividend since 2011, with a forward yield of about 3%, significantly higher than the S&P 500 average of 1.2% [22]

Core Viewpoint - Dividend investors seeking substantial gains should consider dividend stocks with a market capitalization below $10 billion [1] Group 1 - The focus is on dividend stocks that are not mainstream, providing an opportunity for higher returns [1] - Companies with a market cap under $10 billion may offer unique investment opportunities for dividend investors [1]

Core Viewpoint - Jim Cramer recommends three dividend stocks: Enbridge Inc., Pfizer, and Realty Income, highlighting their strong fundamentals and potential for long-term growth despite market volatility [1][2]. Enbridge Inc. - Enbridge is an oil pipeline company that focuses on the volume of oil transported rather than commodity prices, serving over 7 million U.S. customers [3][4]. - The company has a dividend yield of 5.98%, trading at $47.53, and is expected to add $8 billion in new projects next year, which could enhance cash flow and dividend payouts [5]. - Enbridge has raised its dividends for two consecutive years, paying an annual dividend of $2.84, and is considered to have a low-risk business model with strong fundamentals [5]. Pfizer Inc. - Pfizer is recognized as a dividend giant with a yield of 6.86%, viewed as a "bond equivalent" by Cramer, providing stable returns despite limited share price appreciation [6][7]. - The company has made strategic acquisitions, including Seagen and Metsera, to strengthen its drug pipeline and address patent expirations [7]. - Pfizer generated $14 billion in free cash flow this year, has a payout ratio of 53.13%, and has increased dividends for 15 consecutive years, with a 5-year dividend growth rate of 3.62% [8]. Realty Income - Realty Income is a REIT that leases commercial properties, offering a yield of 5.7% and known as 'The Monthly Dividend Company' [9][10]. - The company has a high occupancy rate of 98.7% and owns 15,500 single-tenant properties, demonstrating resilience even in weaker consumer spending environments [10][11]. - Realty Income has raised its dividend four times this year, pays an annual dividend of $3.24, and has a 4.2% annualized growth rate over the past three decades, making it a reliable high-yield dividend stock [10][11].

Market Performance - Major U.S. indexes ended the Christmas-shortened week higher, with the S&P 500 and Dow reaching new record highs, gaining 0.75% and 0.72% respectively, while the Nasdaq Composite increased by 0.70% [1] - The U.S. GDP growth rate for Q3 2025 was 4.3%, exceeding expectations and marking the fastest growth since Q3 2023 [2] - Despite a decline in consumer confidence, investor optimism is driven by strong corporate earnings outlook and AI enthusiasm [2] Stock Performance - Castle Biosciences, Inc. (CSTL) shares increased by 77.9% since being upgraded to a Zacks Rank 1 (Strong Buy) on October 20, significantly outperforming the S&P 500's 3.8% increase [3][6] - F.N.B. Corporation (FNB) shares rose by 13.4% after its upgrade to Zacks Rank 2 (Buy) on October 21, compared to the S&P 500's 2.8% increase [4] - Hamilton Insurance Group, Ltd. (HG) and Kinross Gold Corporation (KGC) saw gains of 19.8% and 7.7% respectively since their upgrade to Outperform on October 17 [7] Portfolio Performance - A hypothetical portfolio of Zacks Rank 1 stocks returned +14.3% in 2025, slightly underperforming the S&P 500's +14.9% [11] - The Zacks Model Portfolio has outperformed the S&P 500 index by over 12 percentage points since 1988, with an annualized average return of +23.9% compared to +11.5% for the S&P 500 [13] - The Zacks Earnings Certain Admiral Portfolio (ECAP) returned -1.30% in Q3 2025, underperforming the S&P 500's +8.1% gain [15] Dividend Portfolio Performance - Johnson & Johnson (JNJ) returned 14.3% over the past 12 weeks, while 3M Company (MMM) increased by 5.2% during the same period [18] - The Zacks Earnings Certain Dividend Portfolio (ECDP) returned -0.01% in Q3 2025, compared to the S&P 500's +8.1% gain [19]

Core Viewpoint - British American Tobacco (BTI) is experiencing a divergence in analyst outlook, with Morgan Stanley maintaining a cautious stance while Jefferies expresses strong confidence in the company's growth potential, particularly in smoke-free products [2][3]. Analyst Ratings and Price Targets - Morgan Stanley analyst Rashad Kawan raised the price target for BTI to 3,050 GBp from 3,000 GBp but retained an Underweight rating on the shares [2]. - Jefferies has named BTI as its top pick in the global tobacco sector, citing a sustainable shift towards a smoke-free product portfolio that is not fully reflected in the current share price [3]. Investment Case Factors - Jefferies analyst Andrei Andon-Ionita highlighted several positive factors for BTI, including market share gains in the US modern oral segment, early signs of volume and pricing improvements, and a solid outlook for combustibles through 2026 [4]. - The company's strong balance sheet is expected to allow for continued and meaningful cash returns to shareholders [4]. Growth in Modern Oral Products - Jefferies is more optimistic than the broader Wall Street consensus regarding BTI's growth in modern oral products, particularly in the US, where Velo Plus has seen over 300% growth in both volume and value [5]. - The resilience of the combustibles business is noted, as it continues to generate robust cash flow and margin expansion despite ongoing volume declines [5].

Group 1: Company Developments - Nutrien Ltd. has streamlined its portfolio by selling its 50% equity stake in Argentina-based nitrogen producer Profertil S.A. for approximately $600 million in pre-tax proceeds [3] - The company has generated roughly $900 million in gross proceeds from asset sales since Q4 2024, indicating a broader divestment strategy to enhance focus and strengthen its balance sheet [4] - Nutrien's President and CEO, Ken Seitz, emphasized that the sale of Profertil is part of efforts to simplify the portfolio, improve earnings quality, and enhance cash conversion [4] Group 2: Market Outlook - Mizuho raised its price target on Nutrien to $65 from $61 while maintaining a Neutral rating, reflecting ongoing pressures in the chemicals, agriculture, and packaging sector [2] - The analyst noted that higher export volumes from China are impacting basic chemical markets, and a weak start to the March quarter is anticipated following a weak December quarter for many companies in the sector [2] Group 3: Business Operations - Nutrien operates as a global supplier of essential crop nutrients, producing and distributing potash, nitrogen, and phosphate [4] - The company supports farmers through its retail platform, Nutrien Ag Solutions, which offers products, services, and agronomic expertise across key agricultural regions [4]

Core Viewpoint - The Toronto-Dominion Bank (TD) is recognized as a strong investment opportunity, particularly due to its recent dividend increase and positive earnings outlook despite challenges in the operating environment [1][4]. Group 1: Dividend and Earnings Performance - On December 4, TD announced a 3% increase in its quarterly dividend to C$1.08 per share, reflecting management's confidence in the bank's growth and earnings potential [3][5]. - TD's earnings have improved, driven by stronger capital markets activity and solid volume growth in Canadian banking, with an expectation of adjusted earnings per share growth between 6% and 8% in fiscal 2026 [4]. Group 2: Analyst Upgrades and Market Position - National Bank analyst Gabriel Dechaine upgraded TD to Outperform from Sector Perform, setting a price target of C$134 [2]. - TD maintains a capital position well above regulatory minimums, which is a positive indicator of its financial health [4]. Group 3: Management and Strategic Focus - Raymond Chun, the new president and CEO, is focused on cutting expenses and enhancing anti-money-laundering controls following a historic settlement with US authorities [5]. - The bank offers a diverse range of products and services, including investing, mortgages, everyday banking, and small business solutions, supported by its online banking platform [6].

Core Viewpoint - York Water is recognized for its long-standing commitment to shareholder dividends, having made 620 consecutive payments over more than two centuries, making it a reliable choice for dividend investors [1][2]. Company Overview: York Water - York Water is the oldest investor-owned water utility in the United States, providing water and wastewater treatment services primarily in southern and central Pennsylvania [4]. - The company generates approximately 64% of its operating revenue from residential customers and 29% from commercial and industrial customers in 2024 [4]. - As a regulated utility, York Water files rate increase requests with the Pennsylvania Public Utility Commission, ensuring steady cash flows to support its dividend payments [6]. Key Financial Metrics: York Water - Current Price: $32.44 [5] - Market Cap: $468 million [5] - Gross Margin: 55.27% [6] - Dividend Yield: 2.70% [6] Company Overview: American States Water - American States Water operates primarily in California and relies on regulated businesses for the majority of its earnings, with its regulated water business contributing 79.2% to its consolidated earnings per share (EPS) of $3.17 in 2024 [8][9]. - The company has a history of 71 consecutive years of raising its dividend, placing it among the elite Dividend Kings [10][12]. Key Financial Metrics: American States Water - Current Price: $73.04 [7] - Market Cap: $2.8 billion [7] - Gross Margin: 51.96% [8] - Dividend Yield: 2.65% [8] Comparative Performance - Over the past 20 years, American States Water has delivered a better total return compared to York Water, highlighting its strong commitment to increasing dividends [11].

Core Viewpoint - Global dividend stocks are gaining attention as global dividends reached a record $1.75 trillion in 2024, reflecting a 6.6% underlying growth, with 17 out of 49 tracked countries paying record dividends [2][3]. Global Dividend Market - The growth in global dividends is broad-based, with significant contributions from countries like the US, Canada, France, Japan, and China [3]. - Approximately 88% of firms worldwide either increased or maintained their dividend payouts during the year, indicating strong consistency for long-term investors [3]. UK Dividend Market - The UK has seen a slower recovery in dividend growth, with expectations for 2026 to deliver a record £86 billion in FTSE 100 dividends, up from £80.7 billion forecasted for 2025 [4]. - The FTSE 100 is projected to offer a forward dividend yield of about 3.2% in 2025 and 3.4% in 2026, which remains above the S&P 500's dividend yield [5]. Pembina Pipeline Corporation - Pembina Pipeline Corporation has a dividend yield of 5.47% and reported adjusted EBITDA of $1.03 billion in Q3 2025, showing a modest year-over-year increase [10][12]. - The company’s adjusted cash flow from operating activities reached $648 million in the quarter, covering dividend payments effectively [13]. - Pembina operates one of the largest energy transportation and midstream networks in Canada, moving crude oil, natural gas, and natural gas liquids [14]. NatWest Group plc - NatWest Group plc has a dividend yield of 3.67% and reported a profit before tax of £2.18 billion in Q3 2025, a 30.4% year-over-year increase [15][17]. - The bank's non-interest income climbed 25.9% to £0.91 billion, while net interest income grew 12.7% to £3.09 billion, indicating a shift towards fee-based businesses [18]. - NatWest has implemented structural hedges to protect lending margins, extending its position into 2027, which may lead to industry-leading margins [19]. Bank of Montreal - Bank of Montreal has a dividend yield of 3.66% and reported a significant increase in profit driven by a rebound in dealmaking and stronger equity markets [21][22]. - The capital markets unit's profit more than doubled to C$521 million, supported by higher revenue from global market activity [23]. - Provision for credit losses fell to C$755 million from C$1.52 billion the previous year, indicating improved confidence in credit quality [24].

Core Insights - Investing in stocks is a preferred method for wealth building, providing both income and growth potential. Dividend stocks are essential for passive income investors, but selecting the right ones can be challenging due to the vast options available [1][2]. Company Summaries Coca-Cola - Coca-Cola (NYSE:KO) is a leading global beverage company with a diverse product portfolio, including soft drinks, teas, coffee, and juices. The company has successfully increased product prices while achieving higher revenue and sales [3][4]. - Coca-Cola is an asset-light business model focusing on syrup concentrate production, which allows for higher profit margins and lower operating costs, resulting in significant cash flow and shareholder rewards [4]. - The company has a strong dividend history, being a dividend aristocrat with 63 consecutive years of dividend increases, a yield of 2.90%, and an annual dividend of $2.04. The payout ratio stands at 67.85% [5]. - In Q3, Coca-Cola reported revenue of $12.5 billion, a 5% year-over-year increase, with organic revenue growth of 6%. Operating income surged by 59%, and EPS rose by 30% to $0.86. The company is expected to perform well in 2026 due to its global presence and steady dividend growth [6]. 3M Company - 3M (NYSE:MMM) is a global conglomerate with a diverse range of products in healthcare, industrial, safety, and consumer sectors. The company has recently seen a positive turnaround, with management raising full-year guidance [7][8]. - In Q3, 3M reported revenue of $6.50 billion, up 3.5%, and generated $1.3 billion in adjusted free cash flow. The safety and industrial segment grew by 5.4%, and EPS was reported at $1.55. The company is on a recovery path [8][9]. - The management anticipates full-year EPS between $7.95 and $8.05, with organic revenue expected to improve by over 2%. In Q3, 3M allocated $900 million for buybacks and dividends [9][10]. - The stock is currently priced at $161.76, reflecting a 24.72% increase in 2025, with a dividend yield of 1.81% and an annual dividend of $2.92. The payout ratio is 36.54% [10][11]. Morgan Stanley - Morgan Stanley (NYSE:MS) is one of the largest financial institutions in the U.S., known for its investment banking and wealth management services. It has a dividend yield of 2.31% and a history of 28 years of dividend payments [12][13]. - The company has seen a 38% stock price increase in 2025, currently trading at $172.96. It has a healthy investment banking pipeline and is positioned to benefit from increased M&A and IPO activities [12][13]. - In Q3, Morgan Stanley reported an 18% revenue increase to $18.22 billion, with profits soaring by 45% to $4.61 billion. The investment banking segment experienced a 44% growth, while equities trading revenue rose by 35% [14][15].