The healthcare sector gives investors a defensive play and many of those stocks provide strong dividends, according to Jimmy Lee, chief executive officer of Strategic Wealth Associates.
“In the kind of economy we have right now, a lot of those stocks provide good, healthy dividends, and we want to get those dividends in this kind of economy,” he told Fox Business Network.
The decline in insurance companies stocks after the Supreme Court ruling on Obamacare last week is not necessarily a buying opportunity.
“We're not specifically bullish on insurers. I still think that there's a lot of news that needs to come out … to figure out which way to play the healthcare sector,” Lee stated.
As far as investing in today’s market, Lee likes big pharma stocks because of the dividends.
“We like the dividend-paying stocks more than the high-beta stocks,” he said.
Biotech stocks got hit harder than pharma did by the ruling, he explained, because the startup nature of biotechs is more volatile.
“Overall the whole healthcare industry, they say, is going to get $2 trillion or more into that sector, so I think it’s going to be positive in the long run for all healthcare companies,” he said
Lee also likes telecom stocks because of the dividends and the growing mobile device market.
“We like the dividends from some of the telecom names, but I think that we're going to continue to see a lot of volatility with the headwinds that we have ahead of us this year,” Lee noted, adding that even with some good news out of the EU summit the eurozone crisis will continue and the fiscal cliff and less government spending will continue to cause volatility.
“So, I think it's good for investors to earn that dividend and put that in their pockets,” he said.
Lee recommends dividend stocks even though the dividend tax rate will increase to 43.4 percent for top earners if there are no changes in the current law, Business Insider reports.
Lee explained that “the nominal return of the dividend is more important than the taxation of it, although we’ll see what happens with the presidential election coming up.”
“There's a lot of uncertainty out there and investors don't like uncertainty in the market,” he added.
“At the end of the day, businesses need to make profit. Those big pharmaceutical companies have to spend a lot of money developing the drugs that they do,” Lee said.
“I'm not sure exactly how we're going to end up. I think there are just a lot of questions still that are unanswered about Obamacare and we'll see how that plays out for the rest of this year,” he stated.
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