Investing

Hedge Funds Dump Stocks: Move to These 5 Big Dividend Winners Now

While we stand just 5% off the all-time highs, it sure doesn’t feel like it. After two lousy weeks and Monday’s big sell-off, when we finally hit the elusive 5% decline that took almost a year to happen, Monday’s late reversal showed that once again, the “buy the dip” crowd will wade into even the largest of sell-offs to buy stocks. Even though Tuesday was mixed, the stock armageddon may have been put on hold, for a while at least. Despite the lofty indexes prints this year, according to BTIG Research 15% of S&P 500 stocks are down more than 20% from their highs, with a much larger percentage of the midcap and small-cap universe are down 20% and more. As has been the case for years, a handful of stocks are responsible for much of the index moves.

In another interesting sidebar, BTIG also noted that hedge fund net exposure is down to the 38th percentile, which as they remarked, suggests that portfolio managers have taken a very defensive stance coming out of summer. If hedge fund managers are getting more defensive, it is probably high-time individual investors do as well.

We screened our 24/7 Wall St. research database looking for stocks that pay reliable dividends, are not overextended and are rated Buy at major Wall Street firms. We found five that look like great picks for the rest of 2021 and into next year. 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 stock picks across Wall Street, and 34% of 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 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 4.85% dividend. SVB Leerink has a Wall Street high price target of $142. The Wall Street consensus price target for AbbVie stock is $125.96. The shares closed on Tuesday at $107.15.