3 supercharged dividend stocks to buy in the stock market sale

Stock market crashes and corrections happen. Since the beginning of the year, the S&P 500 dropped more than 17%. Since the end of the Second World War, the benchmark index has actually fallen by more than 10% in about 30 different times.

A bear market of at least 20% decline will eventually happen again, perhaps even this month. Rising inflation, persistent supply chain problems, and a Federal Reserve determined to raise interest rates to stem runaway price increases make the odds all the more likely.

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St. Louis Fed President James Bullard said it is a “fantasy” to believe that the worst inflation the US has experienced in 40 years can be tamed by tiptoeing around it. He indicated that there is a need for aggressive rate hikes to the point where economic growth stops, and maybe even shrinks.

But even if a bear market were to occur, it’s important to keep such downturns in perspective. The Schwab Center for Financial Research says the average bear market has only lasted about 17 months.

That suggests that investors should not shy away from a decline, but rather be ready to act. The following three supercharged dividend stocks are good bets to see you through the lows of each correction and beyond.

Technician with pills in laboratory.

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AbbVie

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

Internationally, Humira’s sales fell 22% in the quarter to $743 million as a result of the new competition, and they will appear in the US next year when Humira loses the patent. But the cliff is not nearly as steep as once thought. Humira has multiple indications for which it has been approved in the US and abroad, so it will still be a booming therapy for years to come, despite the presence of biosimilars.

And AbbVie has other great drugs growing as well. Skyrizi’s first-quarter sales were nearly $1 billion, up 66%, and it accounts for 23% of the total prescription share of the U.S. organic market. Meanwhile, rheumatoid arthritis treatment Rinvoq saw sales jump 57% to nearly $500 million. AbbVie’s neuroscience portfolio also contributed approximately $1.5 billion of revenue (up 20%) and its aesthetic portfolio added another $1.4 billion (up 22.5%).

AbbVie is a solid growth company and pays an annual dividend of 3.7%. From the start in 2013 as a spin-off of Abbott Labs, AbbVie has increased its dividend by more than 250% and increased each year. It has inherited Abbott’s dividend history and is also considered a dividend aristocrat.

Nurse giving patient a shot.

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Pfizer

Pfizer (PFE -0.93% is another pharmaceutical giant that, after the start of the pandemic, went all out about its COVID-19 vaccines. Comirnaty, the vaccine it was developed with BioNTech, generated $13.2 billion in revenue in the first quarter as global adoption of pediatric and booster shots increased. This represents 89% of Pfizer’s vaccine portfolio and 51% of total sales. With the drug company now seeking approval for booster shots for 5- to 11-year-olds, this niche still has plenty of legs for more growth.

Paxlovid, Pfizer’s oral COVID treatment, also gained significant ground, growing 72% year over year, despite unfavorable exchange rates. It brought in nearly $1.5 billion in sales, and is expected to contribute $22 billion for the full year based on signed supply contracts signed so far this year.

Since Comirnaty expects full-year sales of $32 billion, the two treatments will represent between 53% and 55% of annual sales. The rest of its Covid-related portfolio raises that to about 60% of the total, raising the specter that Pfizer is too reliant on COVID-19 products.

That is certainly the case at the moment. But with more than two dozen Phase 3 trials underway, Pfizer has an above-average chance of finding more than a few winning treatments to bolster its business once the immediacy of the COVID-19 threat wears off.

The stock is also trading at a significant discount of 11 times lagging earnings and 9 times next year’s estimates – as well as just 13 times free cash flow. With a dividend yielding 3.2% annually, it has been making the distribution since 1980 and increasing its dividend every year since 2009 (it had halved its dividend earlier that year when it went to buy Wyeth).

Pharmacist dispensing a prescription.

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Walgreens Boots Alliance

Retail in healthcare Walgreens Boots Alliance (WBA 0.90% is down 17% so far in 2022, but the coming recession shouldn’t be a major factor in the rise and fall of pharmacy stock. Regardless of the economy, people get sick, maybe even more so in bad times.

But Walgreens is engaged in a cost-cutting program that has wiped out $2 billion in costs ahead of schedule, while the transformation plan is reportedly on track to deliver $3.3 billion in annual cost savings by fiscal 2024 (starting September next year). .

Although the decline in earnings in the second quarter caused investors to dump their stocks, sales continued to grow, operating income increased and the retail footprint saw record comparable sales with a gain of nearly 15%. It’s also a solid dividend stock, with 46 consecutive years of payout increasing, putting it on track to be a dividend king within a few years. And since his financial condition is solid and can easily cover his payout, that shouldn’t be a problem.

With the dividend yielding a generous 4.4% and the stock even cheaper than Pfizer at just six times lagging earnings and eight times estimates (free cash flow is slightly higher at nearly 19), it’s a good pick for a growing dividend stock to settle safely in times of market turmoil.

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