5 Big Dividend Biotech and Pharmaceutical Stocks Have Strong Upside Potential

Health and Healthcare

Published: November 1, 2021 7:35 am

Last Updated: November 1, 2021 7:38 am

For years, one of the most dependable sectors, especially for more conservative investors, was health care, which included the top pharmaceutical and biotech stocks among other holdings. However, over the past five years, the sector, while delivering positive total returns, has underperformed some of the more popular sectors, like technology.

With 2021 almost over and 2022 all but upon us, the decade-long expansion in the stock market faces a period of heightened volatility and risk, and the health care sector could benefit from a shift toward more defensive sectors. We screened our 24/7 Wall St. database for Buy-rated stocks in the sector with strong balance sheets, attractive dividend yields and improved cost structure. While all have Buy ratings, but it is still important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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AbbVie

This is one of the top pharmaceutical stock picks 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 last 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 4.74% dividend. SVB Leerink recently trimmed its $148 price target on AbbVie stock to $142, but the Wall Street consensus target is just $122. The shares closed trading on Friday at $114.67, after rising almost 5% on the day.