2 Losing S&P 500 Dividend Stocks to Buy on the Dip and Hold Forever

Last year was great for most stocks. The S&P 500 the index rose 27.5% during the 12 months ended August 26.

It’s always nice to see your portfolio increase in value during a bull market, but it’s also difficult to find stocks to buy at reasonable valuations.

Investors looking for reliable dividend stocks that still look like bargains will be happy to know that not all components of the S&P 500 had a great year. Pfizer (PFE -0.35%) and Bristol Myers Squibb (BMY -0.25%) both fell more than 20% in the 12 months ended August 26

Their prices are down, but both companies continue to raise their dividend payouts. Now, these big pharma stocks are offering high yields that income-seeking investors will find hard to ignore.

1. Bristol Myers Squibb

Bristol Myers Squibb’s share price has fallen, but its dividend continues to rise. Last December, the company raised its quarterly payout for the 15th consecutive year. With the share price in a state of disappointment, its dividend currently offers a juicy 5% yield.

In March, Bristol Myers Squibb completed a $14 billion acquisition of Karuna Therapeutics and its still experimental psychosis treatment, KarXT. The stock is down as the company took a $12.9 billion ongoing research and development charge in the first quarter of this year related to the acquisition.

Bristol Myers Squibb could quickly realize a return on investment thanks to a KarXT launch that is expected to begin before the end of 2024. The FDA is reviewing an application that, if approved, could make it a much-needed new option for patients with schizophrenia. . An approval decision is expected in September.

Unlike currently available antipsychotic drugs, KarXT does not act on dopamine receptors. Its unique mode of action alleviates symptoms of psychosis with fewer side effects, such as weight gain and extreme sleepiness, making compliance a challenge. Patients and psychiatrists demanding a better treatment option are expected to drive KarXT’s annual sales of more than $10 billion at its peak.

Investors will be happy to know that Bristol Myers Squibb could continue to push the needle forward even if KarXT is held back by unforeseen issues. In the second quarter, the company reported more than 50% year-over-year sales growth for five recently launched products.

In addition to KarXT, Bristol Myers Squibb’s development pipeline boasts five experimental drugs in late-stage clinical trials. With plenty of potential growth drivers on the horizon, plus many already in commercial stages, this company could consistently raise its dividend payout for another 15 years.

2. Pfizer

Pfizer shares started 2024 under pressure due to the unexpected collapse of its COVID-19 products. More recently, investors were turned off by a late-stage clinical trial failure for its mRNA-based flu and COVID-19 vaccine.

Pfizer’s recent troubles have hurt its stock price, but haven’t stopped the company from raising its dividend. Earlier this year, the pharmaceutical giant raised its quarterly payout for the 15th consecutive year. At recent prices, the stock is yielding a whopping 5.6%.

Comirnaty’s vaccine sales plunged 87% to just $195 million in the second quarter, but not before Pfizer reinvested profits from the COVID-19 vaccine into future growth drivers. For example, Pfizer acquired a cancer drug developer called Seagen for $43 billion last year.

Padcev is one of four drugs in the commercial phase that Pfizer has picked up from Seagen and could justify the entire acquisition alone. Last year, it became a new treatment option for patients with advanced bladder cancer after initial diagnosis. It quickly became the new standard for this patient population, driving second-quarter sales up 145% year-over-year to an annualized $1.6 billion.

In addition to a leading oncology department, Pfizer is launching a new gene therapy for patients with the rare bleeding disorder hemophilia B. A single dose of the treatment, now known as Beqvez in the US and Durveqtix in the EU, helps hemophilia B patients to clot . the missing factor. This allows patients to reduce or eliminate their dependence on frequent clotting factor infusions.

A gene therapy for hemophilia patients and a new standard treatment for bladder cancer aren’t the only growth factors driving overall sales for Pfizer. The company reported second-quarter sales that were up more than 10 percent this year for more than a dozen products. With a diverse range of products, investors can look forward to steady dividend growth from this stock for many years to come.