Like bargains? Need dividends? No problem. Some of the S&P500‘s shares currently meet both expectations, and several of them boast the hallmarks of a true “forever” holding company. Here’s a look at three of these best bets right now.
That cannot be denied Pfizer (NYSE:PFE) is not quite the pharmaceutical powerhouse it used to be. The loss of patent protection on its blood thinner Lipitor in 2011 was a blow from which it has never fully recovered, but it would also be naive to believe that the company’s research and development (R&D) and acquisitions are now as strong are as in the past. The pharmaceutical sector also appears to have become even more competitive.
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 has fallen 53% from its late 2021 peak.
The long-awaited winds of change are finally blowing, even if it feels more disruptive than helpful. Activist investor Starboard Value is, as it were, shaking up the chains Call Pfizer for its failures on the drug development and acquisition front. Starboard specifically points out that its $43 billion acquisition of oncology company Seagen in 2023 has not yet delivered meaningful upside given its high cost, adding that Pfizer has failed to sell the 15 drugs it listed in 2019 touting potential blockbusters into big money makers.
In CEO Albert Bourla’s defense, the coronavirus contagion has slowed R&D for most pharmaceutical companies, if only by complicating the logistics of drug trials. Nevertheless, Starboard makes some valid points.
But what does this mean for current and future shareholders? While it is usually better for an organization to recognize its own weaknesses and make much-needed changes, Starboard Value’s involvement should still be the driving force behind this overdue overhaul.
Nothing about this drama changes Pfizer’s dividend. Not only has the country been paying an hourly wage quarterly for years, but it has also increased its net annual payment for fifteen years in a row. This streak isn’t really in danger either.
Newcomers will buy into the shares, while the forward-looking dividend yield is 5.8%.
Chances are you’ve never heard of it Real estate income (NYSE:O). Don’t be fooled by the lack of fame. This $55 billion component of the S&P 500 will survive and thrive.
Realty Income is a landlord. It is structured as a real estate investment trust, or REIT. REITs are investments that trade like stocks but pass through the majority of the rental profits generated by that REIT’s underlying real estate portfolio. It’s an easy way for investors to get involved in the property rental industry, without the usual hassle of buying, selling, finding tenants and carrying out maintenance on a property.