2 Dividend Stocks That Are No-Brainer Buys in August
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2 Dividend Stocks That Are No-Brainer Buys in August
09 mins
Broader equities have been volatile this year, and there is no telling what may come next. Perhaps geopolitical tensions, inflation, and other macroeconomic factors will intensify, leading to a bear market. We can’t predict that for sure, but as the famous motto goes, it’s always good to be prepared. To that end, it makes sense to invest in rock-solid dividend stocks, which can generally navigate challenging times better than most other corporations. With that said, let’s consider two dividend stocks that look like great buys right now: AbbVie (NYSE: ABBV) and Merck (NYSE: MRK).
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1. AbbVie
Let’s consider two key reasons why AbbVie may be a great stock to own in the current landscape. First, as a pharmaceutical leader, it offers essential products. No one wants to cut back on prescription drugs, and patients who foot only part of the bill (while insurance pays for the rest) aren’t going to be willing to do so even in a downturn. Second, AbbVie has shown that it can overcome one of the most important risks drugmakers face: The dreaded patent cliff.
It navigated the loss of patent exclusivity for Humira, once by far its best-selling product, just fine. Right now, AbbVie is largely counting on two other immunology drugs to drive growth: Skyrizi and Rinvoq. Both medicines are outpacing expectations and should remain AbbVie’s main growth pillars for the foreseeable future. But AbbVie has already begun planning for when they lose patent exclusivity.
The healthcare giant has a deep pipeline that includes products such as ABBV-295, an investigational weight-loss medicine that could appeal to patients thanks to a convenient monthly dosing schedule. It’ll be a long road before ABBV-295 earns approval, but AbbVie’s efforts with this pipeline program, as well as many others, are worth monitoring. By the time the company loses patent exclusivity for Skyrizi and Rinvoq, there is a good chance it will be prepared to replace both drugs.
In the meantime, AbbVie continues posting strong financial results. In the second quarter, the company’s revenue of about $17 billion increased 10% year over year. AbbVie’s adjusted earnings per share (EPS) were $3.65, up almost 23% compared to the year-ago period. Then, there is AbbVie’s strong dividend program. The company is a Dividend King, or a corporation with at least 50 straight annual payout increases. AbbVie’s business and dividend track record make it a table-pounding buy for income-seekers.
2. Merck
Merck has performed well this year, with its financial results improving compared to 2025. In the second quarter, the company’s revenue increased by 5% year over year to $16.6 billion. The drugmaker reported a loss per share of $0.54, compared to EPS of $1.76 reported in the year-ago period. But that was partly because of acquisition-related expenses. It’s nothing to worry about. Meanwhile, Merck’s HPV vaccines, Gardasil and Gardasil 9, saw combined sales grow 4% year over year to $1.2 billion.
Further, the company’s most important product, the cancer drug Keytruda, is also performing well, as is a new, subcutaneous version of the medicine, dubbed Keytruda Qlex. Combined sales from both formulations grew 5% year over year to $8.4 billion. Since the original version of Keytruda will lose patent exclusivity by 2028, Keytruda Qlex is particularly important, as it should continue to drive growth much longer.
Merck has also expanded its lineup and pipeline in recent years. For instance, the company’s Winrevair, a medicine for pulmonary arterial hypertension, and Capvaxive, a pneumonia vaccine, are relatively recent approvals that are performing well. Merck’s pipeline features promising products such as CD388, a potential long-acting flu prevention therapy.
The drugmaker should handle the upcoming massive Keytruda patent cliff and perform fairly well thereafter. Finally, we can look at Merck’s dividend program. The company currently offers a forward yield of 2.5% — versus the average of about 1% for the S&P 500 — and it has increased its payouts by 93.79% over the past decade. Merck is another great dividend stock to add to a well-diversified portfolio in preparation for potentially challenging times.
Should you buy stock in AbbVie right now?
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Merck. The Motley Fool has a disclosure policy.
