It seems almost humorous that bullish Wall Street strategists and even more bullish financial media talking heads continue to tout that a Federal Reserve pause, and perhaps even a rate cut, may soon be in the cards. However, the 4.9% year-over-year inflation print for April is still way above the 2% Fed mandate level. Perhaps even worse, we are about three weeks from a default of the U.S. government debt, which could bring disaster.
The last time we had a big debt ceiling battle was 2011. Just like now, the standoff may go down to the last minute. While the 2011 battle was resolved two days prior to a default, the market dropped a stunning 19% in the three weeks prior to the deal. Again, we are now three weeks away from a June 1 deadline.
What should worried investors do now? Take profits on high-flying big tech, as only 10 stocks have driven 95% of the S&P 500 gains, and they are almost all mega-cap tech firms, and look to the Dividend Aristocrats for safety. The 67 companies that made the cut for the 2023 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go further. A company must:
- Be a member of the S&P 500.
- Have a value of at least $3 billion at the time of each quarterly rebalancing.
- And have an average daily volume of at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.
With the potential for massive downside still looming, and interest rates likely still headed higher, we thought it would be a good idea to look for Dividend Aristocrats with among the largest dividends that investors can buy now and hold forever. While all are rated Buy at top Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
AbbVie
This is a top pharmaceutical stock pick across Wall Street. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.
One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so in June of 2019 it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth. The purchase officially closed in May of 2020.
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