Evaluating Eli Lilly: Is It the Top Pharmaceutical Stock for You?

Is Eli Lilly the Best Pharmaceutical Stock for You?

Lilly's recently approved weight-loss drug is off to a good start. Regardless of your investment style, adding a few pharmaceutical stocks to your portfolio is a great idea. These players offer you a certain amount of stability because, no matter what's happening in the general economy, people always need their medicines. This generally translates into steady earnings growth for these companies, and pharma companies often share the rewards with investors by offering dividends too.

Lilly's growth products

It's important to note that Eli Lilly sells a broad selection of products, so it doesn't rely on just one area -- like the weight-loss portfolio -- for earnings growth. This reduces risk because if one specialty area sees a decline, others may compensate. These products address a range of treatment areas from diabetes to immunology and cancer. And in the most recent quarter, many of those Lilly defines as "growth products," like breast cancer treatment Verzenio and rheumatoid arthritis drug Olumiant, saw revenue advance in the double digits.

All of this means Lilly today has a well-diversified portfolio with plenty of new products to boost earnings growth in the years to come. Now, let's talk about the products that have pushed Lilly to the forefront in recent times, and these are the two drugs doctors are prescribing for weight loss: Mounjaro and Zepbound. They are the same molecule -- tirzepatide -- but regulators approved Mounjaro for type 2 diabetes, and doctors began prescribing it off-label for weight management. And then late last year, regulators specifically approved Zepbound for that indication.

A market with $100 billion potential

And some forecasts indicate this momentum is just getting started. The global weight-loss drug market could multiply by 16 to reach $100 billion by 2030, according to Goldman Sachs Research.

A look at Lilly's earnings shows the company has grown revenue and net income over time, and after periods of spending, has consistently benefited from those investments.

Meanwhile, Lilly pays a dividend of $5.20, representing a yield of 0.67%. This isn't the highest-yielding pharma stock around, so Lilly may not be the right stock for you if you're looking for a high-yield dividend player.

• Lilly's offers a combination of safety and growth with its diverse product portfolio.
• The company's weight-loss drugs are set to boost revenue significantly in the future.