Defensive Plays: A Market’s Murmur

The oracles—institutional money managers, no less—predict a market correction in 2026 with a rather tiresome predictability. Seventy-four percent, they murmur, foresee a downturn. One suspects their crystal balls are merely polished reflections of past anxieties, seasoned with a dash of current geopolitical indigestion. The Nasdaq, that volatile sprite, hovers near parity, while the S&P 500, a more ponderous beast, has crept up a modest 1.7%. Such placidity, of course, is merely the prelude to a delicious, if temporary, disquiet.

Corrections, dear reader, are not aberrations, but the very rhythm of the market—a subtle arrhythmia, perhaps, but rhythm nonetheless. We endured one recently, and the decade prior was peppered with eight such instances, or their more severe cousins, the bear markets. To attempt to avoid them is as futile as trying to halt the turning of the seasons. Prudence, however, lies in preparing—in selecting equities that, when the herd stampedes, might offer a haven, a pocket of comparative calm.

AbbVie and Merck, pharmaceutical titans, present themselves as such possibilities. They are, at their core, manufacturers of necessity, purveyors of elixirs and remedies that remain in demand regardless of the prevailing economic winds. A certain elegant indifference to the whims of the bull or bear, one might say. Their defensive posture isn’t merely a characteristic; it’s a calculated advantage, particularly noticeable when the market’s more exuberant specimens begin to wilt.

Consider the recent past. During the 2022 bear market, while many portfolios resembled shipwrecked vessels, AbbVie’s stock ascended a respectable 24%, and Merck, with an even more audacious flourish, surged 49%. The S&P 500, meanwhile, languished, down 18%. In 2018, a year of minor market tremors, AbbVie merely dipped 1%, while Merck bloomed, rising a substantial 40%. It’s a curious ballet, this—a graceful sidestep while others stumble.

Naturally, these equities don’t typically outperform during periods of unrestrained optimism. They lack the reckless abandon of growth stocks, the feverish speculation. But their long-term returns—AbbVie averaging 15% annually over the past decade, Merck at 10%—are not dissimilar to the S&P 500’s 14%. They simply refuse to dance to the same frenetic tune.

A Dividend’s Discreet Allure

A hallmark of a truly defensive stock, a subtle whisper of security, is its dividend. And both AbbVie and Merck offer dividends that are, shall we say, rather robust. AbbVie recently increased its payout by 5%, to $1.73 per share, yielding 3.10%. This is their thirteenth consecutive annual increase—a testament to consistency, a quiet defiance of market volatility. It began, one recalls, with their spin-off from Abbott Laboratories in 2013.

Merck, not to be outdone, distributes a quarterly dividend of $0.85 per share, yielding 2.99%. Like AbbVie, this yield is approximately three times the S&P 500’s average. Fifteen consecutive years of dividend increases—a pattern, a deliberate choreography of shareholder value.

Looking ahead, both companies anticipate growth in 2026. AbbVie projects adjusted diluted earnings per share of $14.37 to $14.57—a 43% to 45% increase over 2025. Analysts foresee a 12% upside for the stock. Merck anticipates worldwide sales of $65.5 to $67 billion—a modest 1% to 3% increase, tempered by the acquisition of Cidara. Analysts, however, remain bullish, assigning a consensus buy rating and a median price target of $125 per share—a 7% increase.

These are not, perhaps, stocks to ignite the imagination. They are, rather, equities to weather the storm, to provide a degree of serenity in a world perpetually on the verge of upheaval. And, crucially, to continue raising their dividends—a quiet, persistent melody of value in a cacophonous market.

2026-02-14 16:22

A Dividend’s Discreet Allure

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