If you’re feeling more nervous than usual about buying stocks these days, you’re not alone. From July 16 through August 2, the benchmark was S&P 500 index fell about 5.7% from its all-time high.
The recent stock market decline is still a few points short of an official market correction, but it’s enough to make average investors think twice before buying risky growth stocks.
If you’re worried about a market correction, consider these two healthcare dividend payers. They offer yields of over 3% at recent prices. Plus, you get to keep the payments they make each quarter, even if an unpredictable stock market shoots past correction territory and crashes completely.
1. Bristol Myers Squibb
In 2022, the average American spent $13,493 on medical expenses, up 4.1% from the previous year. Spending on prescription drugs led the way, growing 8.4% year-over-year to $405.9 billion.
While $405.9 billion is a large sum, it was less than 10% of the total national health expenditure of $4.5 trillion in 2022. This suggests spending on prescription drugs, including those marketed by Bristol Myers-Squibb (NYSE: BMY)still has a lot of room to grow.
Bristol Myers Squibb has paid quarterly dividends for over 90 years. The last time the company cut its dividend was in 1999. Based on recent prices, the stock offers a dividend yield of 4.9%.
Despite a steadily rising dividend, shares of the pharmaceutical giant have fallen as investors worry about declining sales of its third-largest revenue stream, Revlimid. The multiple myeloma treatment has already lost its patent-protected market exclusivity in the U.S., and generic competition is expected to reduce sales from an annualized $5.4 billion in the second quarter to almost nothing within a few years.
Patient investors are looking to buy Bristol Myers Squibb shares now and hold them for the long haul, as the market fails to fully appreciate the flood of new treatments coming out of the company’s development pipeline. KarXT, for example, is an experimental schizophrenia drug with a big advantage over the therapies it could compete with.
Existing antipsychotics are known for serious side effects, such as weight gain and drowsiness, that lead to poor adherence. Unlike the drugs it could compete with, KarXT does not act on dopamine receptors. Psychiatrists clamoring for improvements could push annual sales above $10 billion at its peak.
The Food and Drug Administration is expected to announce an approval decision regarding KarXT by September 26. Adding some Bristol Myers Squibb shares to a diversified portfolio and holding them for the long term seems like a great way to boost your passive income stream.
2. AbbVie
AbbVie (NYSE: ABBV) is another big pharma with an impressive dividend track record that you can buy now and hold on to during unpredictable market corrections. The company has increased its dividend payout by 269% over the past 10 years. If we Abbott LaboratoriesThe conglomerate from which it spun off in 2013 has a history of dividend payments stretching back more than a century.
At recent prices, AbbVie offers an above-average dividend yield of 3.3%. Payout growth has slowed recently in response to the loss of patent-protected market exclusivity for Humira, an anti-inflammatory injection that was once the world’s best-selling drug. But in the first half of 2024, competition from biosimilars caused Humira sales to fall about 33% year-over-year to $5.1 billion.
Investors are looking to buy AbbVie shares because it has a handful of recently launched drugs that could more than offset Humira’s losses. Skyrizi, for example, an injection for psoriasis, ulcerative colitis and Crohn’s disease, saw sales surge 46% to $4.7 billion in the first half of 2024.
In addition to Skyrizi, Rinvoq is an arthritis drug that’s helping AbbVie prosper, with first-half sales up 57% year-over-year to $2.5 billion. By 2027, management expects combined sales of Skyrizi and Rinvoq to exceed $27 billion. With contributions from these two drugs, plus several others, AbbVie could more than triple its dividend payout again over the next decade.
Should You Invest $1,000 in Bristol Myers Squibb Now?
Before you buy Bristol Myers Squibb stock, you should consider the following:
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories and Bristol Myers Squibb. The Motley Fool has a disclosure policy.
Worried About a Market Correction? 2 High Yielding Dividend Stocks to Buy Now and Hold Forever was originally published by The Motley Fool
