3 overcrowded dividend shares to be purchased on the stock exchange  A colorful fool

3 overcrowded dividend shares to be purchased on the stock exchange A colorful fool


Stock market crashes and corrections are taking place. Since the beginning of the year, S&P 500 fell by more than 17%. In fact, the benchmark index has fallen by more than 10% by about 30 times since the end of World War II.

The bear market, with at least a 20% drop, will also reappear, perhaps later this month. Rising inflation, stubborn supply chain problems and the Federal Reserve, determined to raise interest rates in the fight against uncontrolled price increases, increase this likelihood.

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Fed President Louis James Bullard said it was a “fantasy” to believe that the worst inflation the United States had seen in 40 years could be tamed by a peak. He indicated the need for an aggressive increase in interest rates to the point where economic growth stops and may even decline.

But even if a bear market does occur, it is important to have such failures in perspective. The Schwab Center for Financial Research states that the average bear market lasted only about 17 months.

This suggests that investors should not cringe in the face of decline, but rather be prepared to act. The following three overflowing dividend stocks are good bets that will guide you through the lowest points of any correction and beyond.

Technician with pills in laboratory.

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AbbVie

Pharmaceutical giant AbbVie (ABBV -0.51%) Humira still relies on the sensational anti-inflammatory drug in terms of most of its revenue – $ 4.7 billion in the first quarter, or 35% of the total $ 13.5 billion – but the increase in biosimilars will eventually take its toll.

Internationally, Humira’s revenue fell 22% to $ 743 million in the quarter due to new competition, and the United States will begin appearing next year when Humira ceases to have a patent. But the cliff is not nearly as steep as once thought. Humira has several indications for which it is approved in the US and abroad, so it will continue to be a massively growing therapy in the coming years despite the presence of biosimilars.

And AbbVie has other great drugs that are also growing. Skyrizi’s revenue was nearly $ 1 billion in the first quarter, a 66% increase, accounting for 23% of the total prescribing market in the U.S. biologics market. Meanwhile, Rinvoq’s rheumatoid arthritis treatment saw revenue increase 57% to nearly $ 500 million. AbbVie’s neuroscience portfolio also contributed $ 1.5 billion in sales (up 20%) and its aesthetics portfolio generated another $ 1.4 billion (up 22.5%).

AbbVie is a solid company and pays a dividend with a yield of 3.7% per year. Since its inception in 2013 as a spinoff from Abbott Labs, AbbVie increased its dividend by more than 250% and increased it every year. Abbott inherited a dividend history and is also considered a dividend aristocrat.

The nurse gives the patient a wound.

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Pfizer

Pfizer (PFE -0.93%) is another pharmaceutical giant who has dealt with its COVID-19 vaccines since the outbreak of the pandemic. Comirnaty, the vaccine she developed BioNTech, generated $ 13.2 billion in first – quarter revenue as global pediatric and booster benefits increased. This represents 89% of Pfizer’s vaccine portfolio as well as 51% of total revenue. With the pharmaceutical company now seeking approval for booster doses for children aged 5 to 11, this niche still has plenty of legs for further growth.

Paxlovid, an oral COVID treatment from Pfizer, also made a significant impact, despite unfavorable exchange rates by 72% year on year. It has generated nearly $ 1.5 billion in revenue and is expected to contribute $ 22 billion for the full year based on signed supply contracts signed so far this year.

As Comirnaty expects to generate full-year revenue of $ 32 billion, the two treatments will account for 53% to 55% of full-year revenue. This increases the remainder of its Covid-related portfolio to approximately 60% of the total, raising the specter of Pfizer’s over-reliance on COVID-19 products.

This is certainly the case now. But with more than two dozen Phase 3 trials underway, Pfizer has an above-average chance of finding more than a few winning treatments that will strengthen its business as the immediacy of the COVID-19 threat subsides.

The stock is also trading at a significant discount of 11 times closing gains and 9 times next year’s estimates – as well as only 13 times free cash flow. With a dividend of 3.2% per year, it has been paying the dividend every year since 1980 and increasing it every year since 2009 (before that, it halved the dividend when it was about to buy Wyeth).

Pharmacist handing out a prescription.

Image source: Getty Images.

Walgreens Boots Alliance

Healthcare retailer Walgreens Boots Alliance (WBA 0.90%) is 17% lower in 2022, but the coming recession should not be a major factor in whether pharmacy shares rise and fall. Regardless of the economy, people get sick, maybe even more in bad times.

But Walgreens is on a cost-cutting program that wiped out $ 2 billion in spending ahead of schedule, while its transformation plan is reportedly well on its way to bringing $ 3.3 billion in annual cost savings by fiscal 2024 (which begins in September next year). ). .

Although its second-quarter income hiccup caused investors to drop its shares, sales continued to grow, operating income grew and its retail footprint recorded record comparable sales with a profit of almost 15%. It is also a solid dividend stock, with 46 consecutive years of rising payouts, which puts it on track to become the Dividend King in a few years. And since his financial situation is solid and easy to cover his paycheck, that shouldn’t be a problem.

Given that the dividend yields a generous 4.4% and its shares are even cheaper than Pfizer with only six times the final profits and eight times the estimates (the multiple of the free cash flow is slightly higher at almost 19), it is a good choice for growing dividend shares . to settle safely during market turbulence.





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