BNL Finance has already gone on the record with its dismal prediction for 2017. We expect slightly higher gains in the market until the S&P 500 tops out at 2,400, followed by a 10-15% correction in equities. What’s the best way to hedge against inevitable loss in overpriced stocks, high yield low beta dividend stocks.
However, the trick is knowing what stocks to buy. Fact is that many of the most popular dividend stocks are overvalued. For example, P&G is a nice dividend stock with a yield over 3%, but it trades at 20x forward earnings. In other words, P&G trades at a premium to the market, which is not good when stocks start to fall.
In Part 1 of a 2-part series we are looking at 10 particular dividend stocks that will perform well when the market starts to fall, if the market starts to fall. If the market keeps going higher, these stocks should also outperform, making them perfect for 2017.
Dividend stocks to own in 2017: GILD stock
Gilead Sciences (NASDAQ:GILD) has lost almost a third of its valuation in 2016. However, 2017 will be different. That’s because in times of turmoil, investors will realize that there isn’t much further for GILD stock to fall, and in a bull market, the same applies.
It is just about impossible to not realize the value in a stock that trades at 7x forward earnings, pays a 2.5% yield, and has bought back 14% of its shares outstanding over the last three years. Furthermore, Gilead Sciences has $32 billion in cash. We are confident that GILD puts some of that cash to work in 2017 with M&A.
While Brian Nichols thinks Gilead will acquire companies like Acadia Pharmaceuticals, I expect it to make a bigger splash in the rare diseases market with the likes of Alexion Pharmaceuticals, or maybe Regeneron Pharmaceuticals. Regardless, GILD stock does well in 2017.