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Markets are adjusting to the high interest rate environment, with all major US stock indexes reporting strong gains in May 2024. But even with the gains, uncertainty remains high, with top analysts predicting a market correction will occur in the coming months. .
A report from Goldman Sachs shows that hedge funds have been overwhelmingly putting aside US stocks since January. The sell-off is driven by persistent inflation and the Fed’s stance to keep rates high for an extended period.
Surprisingly, not all stocks are affected by the sell-off. Analyst data shows that the top hedge funds are accumulating one healthcare stock while liquidating most others.
As of May 26, 2024, more than 95 hedge funds have been added Merck & Co (NYSE:MRK) shares worth $8.11 billion. Fisher Asset Management has the most money bet on this stock, with shares worth $1.83 billion.
Merck & Co is a New Jersey-based pharmaceutical company with a market capitalization of $327.97 billion. The cancer drug manufacturer is best known for its more than six blockbuster drugs, of which PD-L1 inhibitor Keytruda is its biggest success. Keytruda is approved for the treatment of several types of cancer, and its sales account for 45% of the company’s drug sales.
Analysts rate Merck & Co as fairly priced and the best Dow stock to buy in May 2024. The company reported better-than-expected sales and profits in the latest quarter. Furthermore, the share price is up 20.3% so far this year, better than the industry’s gain of 15.3%.
Merck & Co has a consistent 40-year dividend history, with payments made quarterly. The company offers a rolling dividend yield of 2.40% and a forward yield of 2.51%. Merck & Co has maintained an annual dividend growth rate of 8.00% over the past five years.
Consider this high-yield alternative
While Merck & Co is an attractive dividend stock favored by hedge funds, investors should also consider alternative investments that can deliver high returns and diversification. One of those options is EquityMultiple’s Ascent Income Fund.
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Investors in the Ascent Income Fund have redemption options after one year, providing a level of liquidity not often seen in real estate investing. The Fund aims to achieve a net annualized return of 11-13%, with distributions paid quarterly.
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While dividend stocks like Merck & Co are attracting significant attention from hedge funds, investors should also consider high-yield alternative investments such as EquityMultiple’s Ascent Income Fund. By diversifying your portfolio with a mix of dividend stocks and alternative investments, you can create a more resilient and balanced approach to generating income in all market conditions.
This article Hedge Funds Are Loading Up On This Dividend Stock originally appeared on Benzinga.com
