While we stand just 5% off the all-time highs, it sure doesn’t feel like it. After two lousy weeks and Monday’s big sell-off, when we finally hit the elusive 5% decline that took almost a year to happen, Monday’s late reversal showed that once again, the “buy the dip” crowd will wade into even the largest of sell-offs to buy stocks. Even though Tuesday was mixed, the stock armageddon may have been put on hold, for a while at least. Despite the lofty indexes prints this year, according to BTIG Research 15% of S&P 500 stocks are down more than 20% from their highs, with a much larger percentage of the midcap and small-cap universe are down 20% and more. As has been the case for years, a handful of stocks are responsible for much of the index moves.

In another interesting sidebar, BTIG also noted that hedge fund net exposure is down to the 38th percentile, which as they remarked, suggests that portfolio managers have taken a very defensive stance coming out of summer. If hedge fund managers are getting more defensive, it is probably high-time individual investors do as well.

We screened our 24/7 Wall St. research database looking for stocks that pay reliable dividends, are not overextended and are rated Buy at major Wall Street firms. We found five that look like great picks for the rest of 2021 and into next year. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

AbbVie

This is one of the top pharmaceutical stock picks across Wall Street, and 34% of fund managers own the shares. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.

One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so in June of 2019 it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth. The purchase officially closed in May of last year.

AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.

Shareholders receive a 4.85% dividend. SVB Leerink has a Wall Street high price target of $142. The Wall Street consensus price target for AbbVie stock is $125.96. The shares closed on Tuesday at $107.15.

This is also a solid way for more conservative growth and income investors to play the health care sector. Cardinal Health Inc. (NYSE: CAH) is one of the largest drug and medical product distributors. The company generates approximately two-thirds of its profit from the pharmaceutical business and nearly one-third from its medical business.

The pharmaceutical distribution business supports retail/mail/hospital/physician clients, as well as drug manufacturers. The medical business manufactures its own portfolio of medical products and distributes brand-name products to hospitals and physicians.

Cardinal Health stock investors receive a 3.85% dividend. The Barclays price objective is $68, while the consensus target is just $57.79. The shares closed at $51.04 on Tuesday.

Dow

This stock offers investors growth and income potential. Dow Inc. (NYSE: DOW) is a leading materials science company and was formed from the merger of Dow and DuPont in 2017 and the subsequent spin-off 2019. The company is organized into three principal divisions: Performance Materials & Coatings (23% of EBITDA), Industrial Intermediates & Infrastructure (27%) and Packaging & Specialty Plastics (51%).

Dow’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils. Consumer Solutions consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses.

The Infrastructure Solutions segment consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses. Performance Materials & Chemicals consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses. The Performance Plastics unit consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.

Investors receive a 5.04% dividend. Earlier this month, Piper Sandler started coverage on Dow stock with a $78 price objective. The consensus target is $67.86, and Tuesday’s closing share price was $55.53.

Exxon Mobil

Shares of this mega-cap energy leader have backed up nicely as oil sold off in August. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.

The company announced recently that Exxon Mobil Catalysts and licensing has introduced Exxon Mobil Renewable Diesel (EMRD) process technology to help meet the evolving needs for mobility, while utilizing renewable feedstock. This new process technology converts feedstocks including, but not limited to, vegetable oils, unconverted cooking oil and animal fats, into renewable diesel. Due to significant interest in producing renewable jet fuel as a primary product, Exxon is also developing advanced catalyst and process technology solutions that will offer EMRD process licensees flexibility to tailor the amount of jet fuel versus diesel produced.

The huge 6.49% dividend will continue to be defended. The $90 BofA Securities price target is well above the $66.25 consensus target. Exxon Mobile stock closed trading on Tuesday at $53.64.

Walgreens

This huge drugstore chain is a safe retail play for investors now. Walgreens Boots Alliance Inc. (NASDAQ: WBA) operates as a pharmacy-led health and beauty retail company. It operates through three segments.

The Retail Pharmacy USA segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores. It also provides specialty pharmacy services and mail services; this segment operates nearly 10,000 retail stores under the Walgreens and Duane Reade brands in the United States; and six specialty pharmacies.

The Retail Pharmacy International segment sells prescription drugs; and health and wellness, beauty, personal care, and other consumer products through its pharmacy-led health and beauty stores and optical practices, as well as through boots.com and an integrated mobile application. This segment operated 4,428 retail stores under the Boots, Benavides, and Ahumada in the United Kingdom, Thailand, Norway, the Republic of Ireland, the Netherlands, Mexico, and Chile; and 550 optical practices, including 165 on a franchise basis.

The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home health care supplies and equipment, as well as provides related services to pharmacies and other health care providers.

Investors receive a 3.98% dividend. Baird has set a $68 price target. The consensus target for Walgreens Boots Alliance stock is $52.25, and shares closed at $48.02 on Tuesday.

All five stocks have reasonable upside to the Wall Street targets. They all pay at least a 3.5% dividend, and these dividends seem very secure as well. With even moderate appreciation in the shares prices of these top companies, investors should be looking at double-digit total return potential. In a market that is very long in the tooth, that makes a ton of sense now.

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