The S&P 500 is at an all-time high. However, not all stocks in the widely followed index are setting records. Quite a few S&P 500 stocks are nowhere close to their peaks.
That doesn’t mean some of them aren’t great picks, though. Here are three magnificent S&P 500 dividend stocks down 35% or more to buy and hold forever.
Are You Missing The Morning Scoop? Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
Shares of oil and gas producer Occidental Petroleum (NYSE: OXY) are roughly 47% below the high set in late 2022. The stock has ranked among the S&P 500’s biggest losers this year.
But is Occidental a stock to buy and hold forever? Warren Buffett thinks so. He wrote to Berkshire Hathaway shareholders earlier this year that Oxy was one of a handful of select stocks that he planned to own “indefinitely.”
Buffett knows how important U.S. oil production is to the country’s security and economic strength. He also knows that Occidental Petroleum has “vast oil and gas holdings” in the U.S. and is a leader in carbon capture and storage (CCUS) technology.
Granted, Occidental Petroleum doesn’t pay a jaw-dropping dividend. Its forward dividend yield is only 1.85%. However, this oil stock should deliver solid total returns over the long term, especially if its CCUS initiatives achieve their potential.
Pfizer (NYSE: PFE) reached its peak share price in late 2021 thanks to skyrocketing sales of its COVID-19 products. The big pharma stock has plunged almost 60% since then as those sales tanked. Pfizer also faces uncertainty with several top-selling products losing patent exclusivity over the next five years.
The steep decline has resulted in two positive side effects. First, Pfizer’s forward dividend yield is now an ultra-high 6.5%. Second, the stock is cheap. Shares trade at a forward price-to-earnings ratio of only 8.6. By comparison, the average forward earnings multiple of the S&P 500 healthcare sector is 18.3.
Also, Pfizer’s prospects aren’t as dire as they might seem. The company has used its COVID-19 cash stockpile to make multiple acquisitions. These deals added drugs to Pfizer’s lineup and candidates to its pipeline that should fuel growth over the next decade and beyond.
More importantly, Pfizer has the resources and expertise to continue investing shrewdly in internal research and development and acquisitions in the future. This drugmaker has survived and thrived since 1949. I predict Pfizer will remain a pharmaceutical winner for a long time to come.
