2 Unstoppable Dividend Stocks to Buy If There's a Stock Market Sell-Off

A survey last fall by Natixis Investment Managers found that 74% of institutional money managers expect a market correction in 2026. They cited various reasons, from the tech bubble bursting to geopolitics and macroeconomic factors. Currently, the Nasdaq Composite is hovering around even year to date, while the S&P 500 has risen roughly 1.7%.

Corrections are part of the investment landscape. We had one last year, and there have been eight corrections or bear markets over the past 10 years.

While you can't avoid them, you can prepare for them with stocks designed to zig when the market zags. Here are two within the healthcare sector that may help you do that.

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AbbVie and Merck: Good at defense

Two pharmaceutical giants, AbbVie (NYSE: ABBV) and Merck (NYSE: MRK), have more in common than just manufacturing drugs. They are both terrific defensive stocks. That means they make products that are in demand in all cycles, because they're just as critical in a downturn as they are in a bull market. However, their effect on a portfolio is much more pronounced during a downturn, when growth stocks tend to struggle.

In the last few down cycles, both AbbVie and Merck stocks soared. In the 2022 bear market, AbbVie stock jumped 24% for the year, while Merck surged 49%. That year, the S&P 500 finished down 18%. In 2018, when the S&P 500 dropped 4%, AbbVie was down 1%, and Merck rose 40%.

On the other hand, both stocks do tend to underperform in years when the overall markets are strong. But the long-term numbers are generally in line with the S&P 500. They just don't move in tandem with the large-cap benchmark. AbbVie stock has an average annualized return of 15% over the past 10 years, while Merck is at 10%. For comparison, the S&P 500 has a 10-year annualized return of 14%.

Great dividends, too

A hallmark of a good defensive stock is its dividend, and both AbbVie and Merck offer robust dividends.

AbbVie just raised its dividend last month by 5% to $1.73 per share at a yield of 3.10%. This is the 13th consecutive year that it has increased its dividend -- something it has done every year since it spun off from Abbott Laboratories in 2013.

Merck pays out a quarterly dividend of $0.85 per share at a yield of 2.99%. Like AbbVie, its yield is some three times the S&P 500 average yield of 1.13%. It has raised its dividend for 15 years in a row.

Both companies anticipate strong growth in 2026. AbbVie is guiding for adjusted diluted earnings per share of $14.37 to $14.57 per share in 2026, which would be 43% to 45% higher than 2025. Analysts see 12% upside for AbbVie's stock price.

Merck is forecasting worldwide sales of $65.5 billion to $67 billion, which would be up 1% to 3%. Its 2026 earnings outlook is affected by the acquisition of Cidara. But analysts are bullish on Merck, rating it a consensus buy with a $125 per share median price target, which would be up 7%.

These stocks should not only keep raising their dividends, but also be excellent defensive plays in a market downturn.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Merck. The Motley Fool has a disclosure policy.