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The markets are adjusting to the high interest rates environment, with all the major US stock indices reporting strong gains in May 2024. However, even with the gains, uncertainty remains high, with top analysts predicting that a market correction will happen in the coming months.
A report by Goldman Sachs reveals that Hedge Funds have been ditching US stocks hand over fist since January. The selloff is propelled by the stubborn inflation and the Fed’s stance to keep interest rates high for a prolonged period.
Surprisingly, not all stocks are affected by the selloff. Analyst data reveals that top hedge funds are accumulating one healthcare stock as they liquidate most of the others.
As of May 26th, 2024, over 95 hedge funds have accumulated Merck & Co (NYSE:MRK) shares worth $8.11 billion. Fisher Asset Management has bet the most money on this stock, with shares worth $1.83 billion.
Merck & Co is a New Jersey-based pharmaceutical company with a market cap of $327.97 billion. The cancer drugs maker is best known for its more than six blockbuster drugs, with PD-L1 inhibitor Keytruda being its biggest success. Keytruda is approved to treat several types of cancer, and its sales account for 45% of the company’s drug sales.
Analysts rate Merck & Co as fairly priced and the best Dow stock to buy in May 2024. The company reported better-than-expected sales and earnings in the last quarter. Moreover, its stock price has gained 20.3% so far this year, beating the industry’s gain of 15.3%.
Merck & Co has a consistent dividend history of 40 years, with payments being distributed every quarter. The company is offering a trailing dividend yield of 2.40% and a forward yield of 2.51%. Merck & Co has maintained an annual dividend growth rate of 8.00% over the past five years.
Consider This High-Yield Alternative
While Merck & Co is an attractive dividend stock favored by hedge funds, investors should also consider alternative investments that can provide high yields and diversification. One such opportunity is the Ascent Income Fund from EquityMultiple.
The Ascent Income Fund targets stable income from senior commercial real estate debt positions, offering a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors.
One of the key advantages of this high-yield fund is its focus on first-mortgage loans. Each loan and borrower is carefully underwritten and subject to the institutional standards employed by the EquityMultiple investments team. The underlying properties may span geographies and property types/sectors to provide economic diversification. The Fund targets a max LTV of 75% on a whole-loan basis, with most first-liens coming in below 65% LTV, potentially mitigating risk on behalf of investors.
Investors in the Ascent Income Fund have redemption options after one year, providing a level of liquidity not often seen in real estate investments. The Fund targets 11-13% net annualized returns, with distributions paid quarterly.
First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000.
While dividend stocks like Merck & Co are attracting significant attention from hedge funds, investors should also consider high-yield alternative investments like the Ascent Income Fund from EquityMultiple. By diversifying your portfolio with a mix of dividend stocks and alternative investments, you can create a more resilient and balanced approach to generating income in any market condition.
This article Hedge Funds Are Loading Up On This Dividend Stock originally appeared on Benzinga.com
