The market is overlooking the bigger picture for these three names. That means opportunity for you.
Like bargains? Need dividends? No problem. Several of the S&P 500‘s stocks fit both bills at this time, with a bunch of them boasting the makings of a true “forever” holding. Here’s a rundown of three of these best bets right now.
Pfizer
There’s no denying that Pfizer (PFE -0.66%) isn’t quite the pharmaceutical powerhouse it used to be. The loss of patent protection on its blood thinner Lipitor in 2011 was a blow it never quite got over, but it would also be naïve to believe the company’s research and development (R&D) and acquisitions are as strong now as they were in the past. The drugmaking business has also seemingly become even more competitive in the meantime.
That’s why, after a burst of bullish brilliance during and because of the COVID-19 pandemic (Pfizer’s Paxlovid was an approved treatment), this stock’s peeled back 53% from its late 2021 peak.
The long-awaited winds of change are finally blowing, even if in a way that feels more disruptive than helpful. Activist investor Starboard Value is shaking the chains, so to speak, calling Pfizer out for its failures on the drug-development front and the acquisition front. Starboard specifically points out that 2023’s $43 billion acquisition of oncology company Seagen has yet to show meaningful benefit given its high cost, and adds that Pfizer’s failed to turn the 15 drugs it was touting as potential blockbusters in 2019 into those major moneymakers.
In CEO Albert Bourla’s defense, the coronavirus contagion slowed R&D for most pharmaceutical companies, if only by complicating the logistics of drug trials. Nevertheless, Starboard makes several fair points.
But what does this mean for current and prospective shareholders? While it’s typically better when any organization recognizes its own weaknesses and implements much-needed changes, Starboard Value’s involvement should still drive this overdue overhaul.
Nothing about this drama changes anything about Pfizer’s dividend, by the way. It’s not only paid one every quarter like clockwork for years now, it’s also raised its net annual payment for 15 years in a row. This streak isn’t in any real jeopardy, either.
Newcomers will be plugging into the stock while its forward-looking dividend yield stands at 5.8%.
Realty Income
There’s a decent chance you’ve never heard of Realty Income (O -3.16%). Don’t let its lack of notoriety fool you. This $55 billion S&P 500 constituent is here to stay, and thrive.
Realty Income is a landlord. It’s structured as a real estate investment trust, or REIT. REITs are investments that trade like stocks, but pass along the bulk of any rental profits generated by that REIT’s underlying real estate portfolio. It’s an easy way for investors to be in the rental real estate business without the usual hassle of buying, selling, finding tenants, and performing maintenance on a…
Read More: 3 Magnificent S&P 500 Dividend Stocks Down 43%, 20%, and 53% to Buy and
