Top Wall Street Analyst Says Dump The Magnificent 7 And Go All In On These Three Big Pharma Dividend Stocks

In a surprising turn of events, a top Wall Street analyst has advised investors to divest from the Magnificent 7 tech stocks and instead allocate their portfolios to three big pharma dividend stocks. The analyst, from Miramar Capital, believes that these pharmaceutical giants offer a more attractive combination of growth potential and income generation than the tech heavyweights.

The Magnificent 7, consisting of Nvidia, Apple, Microsoft, Tesla, Facebook (Meta), Google (Alphabet), and Amazon, have been the darlings of the stock market, driving a significant chunk of the S&P 500's impressive 25% return in 2024. However, the analyst warns that the continued growth of these tech giants depends heavily on access to chips and other components made in China. The incoming Trump Administration's plans to levy heavy tariffs on Chinese-made chips and tech products could lead to increased expenses for these companies, potentially resulting in higher consumer prices and lower profits.



Biotech stocks, on the other hand, had a more challenging 2024 but are poised to bounce back and win for investors in 2025. Miramar Capital's favorites include Merck (NYSE MRK), Bristol Myers Squibb (BMY), and AbbVie (ABBV). These pharmaceutical giants offer solid dividend yields and trade at more reasonable prices compared to tech stocks, making them attractive alternatives for income-focused investors.

Merck, one of the world's best-known suppliers of vaccines, medical treatments, and veterinary products, saw its stock seesaw in 2024. It hit a high of $134.64 in June before tumbling to $94.48 in November. Analysts attributed the drop to the company lowering its full-year earnings per share estimates by $0.24 to pay for partnerships with Curon Biopharmaceutical and Daiichi Sankyo. However, the $0.24 write-down was a one-time charge, and sales of other Merck products like Keytruda, Winrevair, and Capvaxie remain brisk. This is why analysts believe Merck has a real upside in 2025 and could be a value at the current $99.85 share price.

Bristol Myers Squibb, another well-respected biotech company specializing in medicines fighting serious diseases, had a strong recovery in 2024. Its share price bounced back from a 52-week low of $39.35 in July to a high of $61.08 in November. As of Jan. 8, 2025, the stock is trading at $56.81, up 44% from its mid-year lows and off to a steady start in 2025. The company's forward dividend yield of 4.34% and a payout ratio of 39.35% make it an attractive option for income-focused investors.

AbbVie, a long-standing reputation as a solid biopharma stock, offers a forward dividend yield of 3.68% and a 52-year history of dividend increases. The company's pipeline features over 90 programs in clinical development, with 80% having a novel mechanism of action. Its focus on autoimmune disorder medications and other chronic ailments creates a solid revenue base for future growth.



In conclusion, the top Wall Street analyst's advice to dump the Magnificent 7 tech stocks and go all in on these three big pharma dividend stocks is well-supported by the growth potential and income generation offered by Merck, Bristol Myers Squibb, and AbbVie. While the tech giants face potential headwinds due to their dependence on Chinese-made components, the pharmaceutical giants offer a more attractive combination of growth and income for investors seeking steady returns in 2025 and beyond.