A Natixis Investment Managers survey last fall found that 74% of institutional fund managers expected a market correction in 2026. They cited a variety of reasons, ranging from the bursting of the tech bubble to geopolitical and macroeconomic factors. at present, Nasdaq Composite Index hovering around an even number so far this year, while S&P 500 Index Up about 1.7%.
Adjustments are part of the investment environment. We had one last year, and there have been eight corrections or bear markets in the past decade.
Will artificial intelligence create the world’s first trillionaire? Our team just released a report on a little-known company that has been described as an “essential monopoly” that provides critical technology that both Nvidia and Intel need. continue”
While you can’t avoid them, you can respond to them with stocks designed specifically to adjust when the market moves. Here are two sources within the healthcare industry that can help you do just that.
The two major pharmaceutical giants, AbbVie (NYSE: ABBV) and Merck (NYSE: MRK)have more in common than just manufacturing drugs. They are both excellent defensive stocks. This means that the products they produce are in demand in all cycles, as they are just as relevant during a downturn as they are during a bull market. However, growth stocks tend to underperform during economic downturns, and their impact on a portfolio is more pronounced.
Shares of AbbVie and Merck have soared over the past few down cycles. In the 2022 bear market, AbbVie shares are up 24% for the year and Merck shares are soaring 49%. That year, the S&P 500 closed down 18%. In 2018, the S&P 500 fell 4%, AbbVie fell 1%, and Merck rose 40%.
On the other hand, these two stocks tend to perform worse in years when the overall market is strong. But the long-term data is generally in line with the S&P 500. They just don’t move in tandem with large-cap benchmarks. AbbVie stock has delivered an average annualized return of 15% over the past 10 years, while Merck has returned 10%. By comparison, the S&P 500’s 10-year annualized return is 14%.
One sign of a good defensive stock is its dividend, and AbbVie and Merck both offer strong dividends.
AbbVie just last month raised its dividend 5% to $1.73 per share, giving it a yield of 3.10%. This is the 13th consecutive year the company has increased its dividend – it has done so every year since the company split. Abbott Laboratories 2013.
Merck pays a quarterly dividend of $0.85 per share, yielding 2.99%. Like AbbVie, its yield is about three times the S&P 500’s average yield of 1.13%. It has raised its dividend for 15 consecutive years.
