Uncertainty over elevated inflation, future interest rate hikes, and a potential recession has weighed heavily on financial markets in 2022. In fact, the S&P 500 index has dipped 19% year to date. 

But some sectors have fared far better to this point -- even as the markets have plunged. Since prescription drugs are needed in all economic environments, pharma stocks have unsurprisingly trounced the broader markets. AbbVie (ABBV 0.10%) and Bristol-Myers Squibb (BMY -0.02%) are two of the biggest and best pharma companies in the world that income investors should consider buying. Here's why.

A doctor and patient speak with each other at an appointment.

Image source: Getty Images.

1. AbbVie

Chicago-based AbbVie owns the top-selling drug in the world, called Humira. The problem is that it will lose its patent in the U.S. next year; yet the company should have a strong enough pipeline to quickly bounce back, and investors appear to be optimistic.

That's because AbbVie has nearly 60 compounds in its pipeline across therapy areas like oncology, immunology, and neuroscience. The company has also secured approvals from the U.S. Food and Drug Administration in recent months that could be blockbusters like Skyrizi for psoriatic arthritis and Rinvoq for eczema.

Shares of AbbVie have gained 13% year to date. Yet the stock still appears to be attractively priced for long-term investors. AbbVie's forward price-to-earnings (P/E) ratio stands at about 11, which isn't a steep valuation for a stock that is a member of the Dividend Kings. And if that wasn't convincing enough, AbbVie's trailing 12-month price-to-free-cash-flow ratio of 12.4 is a bit lower than its 10-year median of 12.9. 

AbbVie's 3.7% dividend yield puts the S&P 500's 1.6% yield to shame. And with its dividend payout ratio currently standing at 40%, the dividend should be able to grow at a mid-single-digit clip annually for the foreseeable future. This makes AbbVie a good pick for both immediate and future income. 

2. Bristol-Myers Squibb

Like AbbVie, Bristol-Myers Squibb also has top-selling drugs facing patent expiration this decade. This includes cancer drugs Revlimid and Opdivo, as well as the anti-coagulant co-owned with Pfizer called Eliquis. These three drugs together contribute to approximately two-thirds of Bristol-Myers' revenue.

But with more than 50 compounds in its pipeline currently under development, the company should have enough firepower to overcome this challenge over the long run. This explains why analysts are forecasting that Bristol-Myers will deliver 4.5% annual earnings growth over the next five years. 

Meanwhile, the stock rewards investors with a 2.9% dividend yield, which is nearly double the S&P 500's 1.6%. And that amount should have plenty of room to grow in the years ahead since the dividend payout ratio currently stands at just 29%. As a result, I believe that dividend growth will slightly exceed earnings growth over the medium term.

The stock also sports an attractive valuation with a forward P/E ratio of 10. This is well below the pharmaceutical industry's average of 13.5. Bristol-Myers isn't just cheap compared to its peers; the stock's trailing price-to-sales ratio of 3.6 is meaningfully lower than its 10-year median of 4.2. 

Bristol-Myers Squibb's stock has surged 22% higher year to date. Yes, like AbbVie, Bristol-Myers still looks like a steal for both income and value investors.