Dividend stocks benefit from falling interest rates as money managers shift to income-oriented equities with yields above the S&P 500.
With signs of a cooling U.S. labor market, economy, and core inflation, the Federal Reserve may cut rates soon, favoring high-yield dividend stocks.
As these conditions present favorable conditions for investing in dividend stocks, Finbold analyzed the market to find two high-yield dividend options to invest in and hold for long-term gains.
Picks for you
AbbVie (NYSE: ABBV)
AbbVie (NYSE: ABBV) stock is a top dividend payer, boasting a 3.59% yield and a 10% annual dividend growth rate over the past five years, well above the 6% average among top dividend growers. ABBV shares trade at under 15 times forward earnings, compared to the S&P 500’s nearly 21 times forward earnings multiple, making it attractively priced.
Over the past five years, ABBV shares have gained 117.71% in value.
However, AbbVie is navigating the loss of market exclusivity for Humira, its key cash cow, from 2013 to 2023. The good news is the company is managing this transition well.
Sales of newer immunology drugs Skyrizi and Rinvoq are strong, and neuroscience drug Vraylar is exceeding expectations since its 2022 label expansion for major depressive disorder.
While investors should monitor late-stage immunology meds from competitors, AbbVie appears undervalued as potential rate cuts loom.
Pfizer (NYSE: PFE)
For steadfast long-term investors, Pfizer (NYSE: PFE) stock is a must-have in the income portfolio. With a dividend yield of 5.76% and shares priced at less than 13 times future earnings, the PFE shares are poised to outperform the market in the next 10 to 20 years.
Pfizer stock, a major player in the pharmaceutical industry with a wide range of drugs and promising pipeline candidates, is positioned for strong future performance. Despite this, its stock is trading below the S&P 500.
Contrary to the ABBV stock, PFE stock reached its peak during the COVID-19 pandemic thanks to its vaccine, making it trade 29.17% in the red over the past five years
One reason is the revenue decline following the drop in COVID-19 product sales after the pandemic’s peak. Also, PFE shares acquisitions during the pandemic generated little investor interest.
There’s less excitement around PFE stock compared to companies focused on weight loss medications. However, Pfizer’s focus on oncology, known for its strong pricing power and longevity, is overlooked.
With their high dividend payouts, ABBV and PFE are perfect options for investors seeking high yields on their long-term investments.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
