This S&P 500 dividend stock may be the best bad-news buy in the market.

There are two proverbs that describe the difficult situation investors face when considering buying a declining stock:

• "Don't try to catch a falling knife."

• "Buy Low".

These quotations may seem to contradict each other. However, when taken in their proper context, they are not contradictory. Some sinking stocks have poor underlying business and should be avoided - like a falling knife. Others have solid underlying business and are likely to rebound over time.

I thinkTerry Rae Inc. (NYSE: PFE)It is the latter. This is onlyStandard & Poor's 500Index dividend stocks may be the best bad news buy in the market.

Bad News and More Bad News

Admittedly, a quick look at the stock chart of Terry Inc. shows that the calls for a "knife drop" far outweigh the "downtrend." Over the past 12 months, shares of the major drugmaker have plummeted 351 TP3T, while the S&P 500 has risen nearly 251 TP3T.

The bad news for Terrific started with a decline in COVID-19 revenues. Last year, sales of the COVID-19 vaccine Comirnaty fell 701 TP3T, while sales of the COVID-19 oral therapy Paxlovid plummeted 921 TP3T. the company expects total aggregate sales of these two products to fall another 361 TP3T in 2024.

There is more bad news that is not related to COVID-19: Terry Noble is on the edge of a patent cliff. By 2030, Terrific will lose U.S. patent exclusivity on eight of its products. These include some of the company's best-selling drugs, such as Eliquis, Ibrance, Xtandi and Vyndaqel.

How hard will the loss of these franchises hit Terry? The major drugmaker expects revenues to be affected by about $17 billion a year by 2030. To put that in perspective, the company's total revenue last year was about $55.5 billion.

A ray of sunshine in the dark clouds

Now for the good news: There are a few rays of sunshine coming through the dark clouds at Terry.

First and foremost, the company has had great success in obtaining new product approvals and new indications for existing products. 2023 saw a record nine FDA approvals for new drugs and vaccines.

The company expects the new products and indications introduced in the first half of this year to add about $20 billion in annual revenue by 2030. Note that this is a risk-adjusted forecast, well above the expected negative sales impact of the looming patent cliff.

Secondly, the big drug company has been busy swallowing up smaller drug makers. Terry's acquisition of Seagen for $43 billion is no small deal. The company believes that by 2030, its business development deals will generate $25 billion a year in new revenue.

Third, Terry should have other new drugs on the horizon that are not included in the first two forecasts. For example, the promising cancer treatment decitabine vedotin and the flu vaccine PF-07252220 are being evaluated in late-stage clinical studies.

The best bad news buy on the market?

I can't leave out Terrific's super high dividend yield of 6.3%. According to Dave Denton, Terrific's Matteo CFO, who spoke on the company's Q4 earnings call, the dividend is likely to increase. With such a high yield, Terrific doesn't need to realize much stock price growth in order to give investors an attractive mass return.

It's not hard to see why Terry's valuation is also attractive. Shares currently trade at 12.7 times forward earnings. By comparison, the S&P 500 Healthcare sector trades at 18.5 times forward earnings.

Is Terry really the best bad news buy in the market? I think it might be.

Should you invest $1,000 in Terry now?

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Keith Speights owns shares of Terry's. The Motley Fool has a position in Terry's and recommends Terry's. The Motley Fool has a disclosure policy.

This S&P 500 Dividend Stock May Be the Best Bad News Buy in the Market was originally published by The Motley Fool.