Just when you thought it was starting to look safer, yet another COVID-19 variant comes around. With the Omicron variant comes the potential for renewed restrictions and lockdowns. There was some discussion about how Omicron symptoms may be milder than other variants. In addition, existing vaccines are still expected to provide some protection, and it also appears they can perhaps be tweaked to account for the new strain.
With December here and 2021 almost over, many investors are looking to the holidays. One thing is for sure, and that is the stock market is very overbought. Some of the momentum stock trades are very crowded and have been hit hard during recent sell-offs. With interest rates remaining very close to generational lows, top-quality dividend health care stocks may be the way to go for the rest of 2021 and in 2022.
Concern over the Omicron variant has scared investors fleeing to the Treasury market yet again, causing yields to tumble to levels posted in early November. While not the lowest of the year, the inflation-adjusted yield for the 10-year Treasury is a stunningly bad −4.7%, the lowest since 1974.
Now is the time to reduce risk and more to safer ideas. Often when more conservative income investors look for companies paying big dividends they are drawn to the Dividend Aristocrats, and with good reason. The 65 companies that made the cut for the 2021 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. However, the requirements go even further, with the following attributes also mandatory for membership on the aristocrats list:
- Companies must be worth at least $3 billion at the time of each quarterly rebalancing.
- Average daily volume must be at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.
Five health care Dividend Aristocrats make good sense now for worried investors. They are excellent ideas during this new round of turmoil, and all are Buy rated 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.
Abbott Labs
This top pharmaceutical and med-tech stock has very solid growth potential. Abbott Laboratories (NYSE: ABT) manufactures and sells health care products worldwide.
Its Established Pharmaceutical Products segment offers branded generic pharmaceuticals to treat pancreatic exocrine insufficiency; irritable bowel syndrome or biliary spasm; intrahepatic cholestasis or depressive symptoms; gynecological disorders; hormone replacement therapy; dyslipidemia; hypertension; hypothyroidism; Ménière’s disease and vestibular vertigo; pain, fever and inflammation; migraines; anti-infective clarithromycin; cardiovascular and metabolic products; and influenza vaccines, as well as to regulate physiological rhythm of the colon.
The Diagnostic Products segment provides immunoassay and clinical chemistry systems; assays used to screen or diagnose cancer, cardiac, drugs of abuse, fertility, infectious diseases, and therapeutic drug monitoring; hematology systems and reagents; diagnostic systems and cartridges; instruments to automate the extraction, purification and preparation of DNA and RNA from samples, and detect and measure infectious agents; genomic-based tests; informatics and automation solutions; and a suite of informatics tools and professional services.
Abbott Laboratories stock investors receive a 1.43% dividend. Morgan Stanley’s $146 price target is well above the $115.53 consensus target. The shares closed Tuesday’s trading session at $125.77.
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