Many prognosticators across Wall Street feel that interest rates will start to rise in 2021 Deutsche Bank is negative on duration and sees the 10-year Treasury bond yield rising to 1.5% in the second quarter of 2021 from the current yield of 0.95%. While that kind of move would be tough for the bond market, it would have little if any effect on dividend-paying stocks. One area looks like a solid place for investors next year is large-cap pharmaceutical stocks.
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The current stock market is massively overbought, sentiment is ultra-bullish and the purchase of call options by small investors has skyrocketed. That’s always a sign of a very risky market. With all of the major indexes printing all-time highs, rotating from overbought and crowded momentum stocks to dividend-paying big pharma now makes sense.
We screened our 24/7 Wall St. research database for pharmaceutical leaders that pay solid and dependable dividends and 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 one of the top pharmaceutical stocks picks across Wall Street, and 34% of the fund managers own the shares. 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 this year.
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.
Shareholders receive a 4.80% dividend. Morgan Stanley recently lifted the price target to $120 from $108. The Wall Street consensus target is $112.05, and AbbVie stock traded early Thursday near $108.
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