The strong move higher that Nvidia has driven in the stock market this year has been significant, and the world of artificial intelligence has driven stock prices this year. Nvidia’s performance has eclipsed nearly all other assets since the start of the year, posting a remarkable 262% year-to-date growth. This has many investors chasing what may have already gotten away from them, at least for now.
One sector that has been almost disregarded this year is health care. While performance-based fast-money hedge funds may not be that excited about the sector, private equity firms and huge institutions like Blackrock have been buying up all sorts of assets from hospitals to nursing homes to even fertility clinics. In its own literature for its health care fund, Blackrock noted this with the potential for recession possibly right around the corner in 2024:
The sector has a history of stability and outperformance during periods of both recession and inflation, as healthcare demand has historically held firm regardless of economic conditions. Over the last seven recessionary periods in the U.S., healthcare outperformed the broader market by an average of 10%. The sector also has demonstrated relative resilience during inflationary episodes.
While most investors cannot go grab a big chunk of private equity purchases, they can buy the top-yielding stocks in the sector now, those with strong total return potential. We screened our 24/7 Wall St. health care database looking for the top companies with the biggest dividend payouts. Seven stocks hit our screens, and all look tempting for investors looking to steer away from AI-hype-driven stocks.
While all the following are rated Buy, 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 a top pharmaceutical stock pick 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 2020.
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.
Investors receive a 3.98% dividend. Wells Fargo’s target price on AbbVie stock is $165. The consensus target is $169.14, and the stock closed trading on Friday at $149.02.
Amgen
This biotech giant remains a safer way to play the massive potential growth in biosimilars. Amgen Inc. (NASDAQ: AMGN) discovers, develops, manufactures and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology and neuroscience.
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