The Healthcare Sector Can Be a Tricky Sector to Navigate but ETF Products Can Help

There are several different sectors out there and each of them bring their own unique differences to the table. One of the more popular sectors is the healthcare sector. This includes pharmaceuticals, hospitals, and other similar companies. People always says death and taxes are certain, so there will always be a need for healthcare. However, the way these companies operate and how people invest in them can vary and often times be difficult. The intricate workings of big pharma and beyond can take long hours of research to understand.

Published over a year ago
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Reviewed by Raphi Shpitalnik

For example, let us look at pharmaceutical companies. Many of their products take hundreds of millions of dollars in testing, and that doesn’t even guarantee that they will have the ability to sell them to the public. If you look at a pharmaceutical company, you may see a large fall in price at times due to a drug not making it pass the tests. This means the company has to start from the beginning if they wish to push this drug through again.

Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Health Care income statement, its balance sheet, and the statement of cash flows. Potential Health Care investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Health Care investors may use each financial statement separately, they are all related. The changes in Health Care's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Health Care's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of Health Care fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Health Care performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Health Care shares is the value that is considered the true value of the share. If the intrinsic value of Health is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Health Care. Please read more on our fundamental analysis page.

And What about dividends?

A dividend is the distribution of a portion of Health Care earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. Health Care dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. Health one year expected dividend income is about USD0.34 per share.
Investing in stocks that pay dividends, such as etf of Health Care Select, is one of many strategies that are good for long-term investments. Ex-dividend dates are significant because investors in Health Care must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for Health Care. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

An Additional Perspective On Health Care Select

Beyond that, there are others such as medical tool manufacturers and diagnostic companies that operate in the same sector but are facing completely different risks than a large drug maker. This all may sound overwhelming, but thanks to ETF products, or exchange traded funds, it allows people to gain sector exposure without taking on company specific risk.  

In this case there is the ticker XLV and it is a SPDR product that covers healthcare. The benefits to entering into an ETF such as this is it eliminates that need to research individual companies critically. Now it is still important to look at the holdings of the fund, but you don’t need to pick apart every aspect of the company. Also, the advantage is that you no longer need to worry about an individual company going under due to several fail drug productions or federal compliance issues.   

It is important to have a well-diversified portfolio and ETF products have taken the need to find individual companies out of the question. For sectors that may be complex or unfamiliar, and ETF allows you to gain exposure while letting the fund do the work of trying to obtain a solid return. Now, that doesn’t mean you need to skip due diligence. You as an investor should look at the fund manager and examine how long the fund has been around. Also look at average daily volume and what the fund is trying to achieve. Healthcare can be a difficult sector to navigate, but knowing what products and tools you have at your disposal can help lessen the stress.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Health Care Select. Please refer to our Terms of Use for any information regarding our disclosure principles.

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