Two Robust Dividend-Yielding Stocks to Invest in During a Potential Stock Market Downturn
Market enthusiasts have plenty of reasons to rejoice as 2024 draws to a close. The S&P 500 index broke numerous all-time highs throughout the year, leading to a remarkable 25% growth in returns, even with a robust economy and impressive corporate earnings.
However, it's essential to stay vigilant, as stock markets often surprise us in unexpected ways. Potential risks for investors include inflation concerns and uncertainties surrounding additional interest rate reductions by the Federal Reserve in 2025.
A defensive approach, focusing on high-performing companies with stable dividend income potential, could be a viable strategy in this market scenario. Let's examine two notable dividend stocks from the healthcare sector that could be valuable additions to your portfolio in case of a market downturn.
1. AbbVie
A highly-regarded player in the global biopharmaceutical industry, AbbVie (ABBV -0.66%) demonstrates expertise across various therapeutic areas, with a significant focus on immunology diseases and a promising trajectory in oncology and neuroscience.
Above-average performance this year has driven the stock's value by 12%, backed by an outlook that prompts optimism, as exhibited through an enhanced full-year earnings projection.
What sets AbbVie apart is the impressive growth of its Skyrizi and Rinvoq autoimmune drugs, which target conditions such as psoriatic arthritis, Crohn's disease, and rheumatoid arthritis through diverse methods. They serve as promising successors to Humira, which lost its market exclusivity in 2023.
According to AbbVie, the combined annual sales of Skyrizi and Rinvoq are projected to surpass $27 billion by 2027, marking a significant increase from the $16 billion reported last year, with additional growth potential in the coming years as new indications are explored.
This growth is crucial for investors considering the longevity of AbbVie's quarterly dividend of $1.64 per share, yielding a 3.8% return on a forward basis. Moreover, the company has upheld its tradition of annual dividend increases for an astounding 53 consecutive years and shows no signs of deviating from this impressive streak. In essence, AbbVie constitutes an excellent dividend growth stock that will continue to reward shareholders.
2. Pfizer
Unlike AbbVie, Pfizer (PFE 0.23%) presents a captivating investment opportunity, offering discounted shares in a pharmaceutical industry titan that has experienced difficulties exceeding the COVID-19 vaccine and treatment sales revenue peaks in 2021 and 2022.
Pfizer's financial reports indicate a promising turnaround, illustrating an enhanced outlook with new prospects for growth.
Drugs like Nurtec, which targets primary care sector migraines, and Xtandi, as a prostate cancer treatment in the oncology group, have witnessed increasing sales due to widespread global adoption. Earnings have surged substantially over the past year, heralding the prospect of continuous profitable growth.
What sets Pfizer apart is its aptitude for innovation beyond its already broad portfolio of top-tier drugs. It currently possesses six phase 3 clinical trial candidates, with anticipated updates within the next year, potentially acting as significant catalysts for the stock.
Meanwhile, Pfizer's shares offer investors a 6.7% forward dividend yield, following a recent increase in its quarterly distribution to $0.43 per share. Whether Pfizer's stock value soars immediately or gradually, investors are presented with an appealingly high yield to wait, relying on robust underlying free cash flow.
Concluding thoughts
The healthcare sector stands as a resilient segment of the stock market, capable of withstanding potential market fluctuations. Regardless of the changing economic landscape, the consistent demand for medical products and services, further bolstered by an aging population with rising chronic conditions, guarantees longevity.
Despite their distinct operational and financial profiles, both AbbVie and Pfizer commence 2025 with a positive outlook. Long-term investors eager for a more defensive perspective can consider integrating shares of AbbVie and Pfizer into a diversified investment portfolio.
In the realm of finance and investing, these two companies, AbbVie and Pfizer, offer promising opportunities due to their strong performance in the healthcare sector. With AbbVie's impressive growth of Skyrizi and Rinvoq, as well as its consistent dividend increases, it has a high dividend yield of 3.8% and is considered an excellent dividend growth stock. On the other hand, Pfizer's turnaround in financial performance, new drug prospects, and high dividend yield of 6.7% make it an appealing option for investors seeking a reliable yield, even in the face of potential market fluctuations.
