**Pfizer and AbbVie Poised to Outshine S&P 500 Despite Overheated Market**

With the surging excitement over artificial intelligence (AI), U.S. stock market indexes have entered a high-valuation zone, marking a period of intense activity. The S&P 500 index, a key benchmark, has particularly seen a significant climb, jumping about 51% since the close of 2022. This spike has pushed the index to a cyclically adjusted price-to-earnings (CAPE) ratio of approximately 35.2, a level observed only twice in the past 40 years before subsequent market downturns.

Despite the higher valuations, a closer look reveals that not all components of the S&P 500 are receiving the recognition they deserve. Pharmaceutical giants Pfizer and AbbVie are two such underappreciated stocks that have the potential to outperform the benchmark in the coming decade, especially given their attractive dividend yields and strong growth prospects.

Starting with Pfizer, the company currently offers an enticing dividend yield of 5.8%. Last December, Pfizer raised its dividend for the 15th consecutive year, signaling confidence in its future profitability. The company’s recent $43 billion acquisition of Seagen, which added four commercial-stage cancer therapies to its portfolio, has significantly boosted its revenue. These therapies, initially contributing $2.6 billion in annual sales, have seen revenues climb to $3.3 billion under Pfizer’s management and are projected to surpass $10 billion by 2030. With nine new FDA-approved drugs in 2023 and 65 experimental medicines in clinical stages, Pfizer’s growth trajectory appears robust.

AbbVie also presents a strong case for potential outperformance with a yield of 3.2%. Although the company faced a 9% drop in second-quarter adjusted earnings year over year due to the loss of U.S. patent protection for Humira, its investment in new drug development is already paying off. AbbVie’s new leading drugs, Skyrizi and Rinvoq, launched in 2019, are showing impressive sales figures. Skyrizi has reached an annualized $10.9 billion in sales, while Rinvoq sales soared by 55% in the second quarter year over year, hitting an annualized $5.7 billion. The combined sales of these two drugs are expected to exceed $27 billion by 2027, bolstered further by the continuing popularity of Botox for both aesthetic and therapeutic purposes.

In summary, while the broader market may be running hot, individual stocks like Pfizer and AbbVie offer compelling opportunities for investors. Both companies, with their substantial dividend yields and promising pipelines, are well-positioned to outperform the S&P 500 in the decade ahead.