With the debt ceiling issue once again kicked down the proverbial road, investors can focus on what the upcoming summer months will have to offer, and it may not be pretty. The recent rally, which has been spurred on by the incredible hype on artificial intelligence, has been called the “narrowest” rally since 1999, which also was characterized by technology names driving the markets higher. The reality is that just 10 stocks have driven all the gains in the Nasdaq and the S&P 500, while over half of the stocks in the latter index still trade in bear market territory.
What should investors do now? One thing is for sure; take profits on Nvidia. We saw on Thursday top tech names like Salesforce and Okta post solid results but get hammered due to their outlooks for the rest of the year. While not horribly negative, the forecasts were based on the economy staying the same as it is now, and that seems highly unlikely given the rash of declining economic activity.
The best idea for investors is to take profits on stocks that have benefitted from the recent moves higher and shift to safe-haven Dividend Kings. These are the 48 companies that have raised the dividends they pay to shareholders for a stunning 50 consecutive years or longer. We screened the current Dividend Kings list for the stocks in sectors that could hold their own in a longer-lasting higher-rate scenario. All are rated Buy at major Wall Street firms, but 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.
AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.
Investors receive a 4.34% dividend. Wells Fargo’s $195 target price on AbbVie stock is a Wall Street high. The consensus target is $165.17, and the stock closed on Thursday at $133.44.
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