Investing is one of the most emotional activities a person can participate in.

The psychological pulls and tugs on an investor throughout the process of buying, holding and selling stocks is exactly what makes it so intriguing.

#-ad_banner-#You see, investors can turn on an individual stock or even a whole sector based on little more than a single negative news headline.

Or, as we’ve seen over the last month, a single tweet by a person that isn’t even an elected official anymore can send a number of financially lucrative stocks far below their real intrinsic value.

Today’s story began with the overnight profit grab — and subsequent viral rage seen online — by hedge fund manager-turned-drug company founder, Martin Shkreli’s. In September, Shkreli bought the rights to Daraprim, a drug that treats toxoplasmosis, an infection caused by a parasite, and promptly raised the price of the drug to $750 per pill, from just $13.50 — a 5,500% price hike. A few days after that, Democratic Presidential Candidate Hillary Clinton tweeted this:

When you mix grandstanding political messages with a sector as large and profitable as Big Pharma, you’re going to get some overreactions on both sides. That’s exactly what’s happened.

After that tweet, the iShares NASDAQ Biotechnology Index ETF (Nasdaq: IBB) — a great sample of some of the largest drug developers and makers in the market — fell 14%.

Here’s the problem: we know Clinton won’t be able to do anything to the drug industry, let alone on the development side any time soon.

Even if she won the presidential election — which won’t be held for over a year — she wouldn’t be sworn in until 2017, more than 15 months from now.

Then, she’d have to somehow push legislation through one of the most ideologically split Congresses in history.

Her task isn’t easy. Are people upset about the price of prescription drugs in the United States? Absolutely. Will the industry be forced to change any time soon? I doubt it.

So that reaction we saw in biotech stock prices is clearly overkill. The industry isn’t going to forfeit a dime of their profits today.

In fact, with the recent trade deals the current administration has been pushing — the TPP (transpacific partnership) and TTIP (Transatlantic trade and investment partnership) — American drug companies could be looking at even larger pools of customers in Asia and Europe without being forced to give up any of their profit margins.

Of course, when there’s an overreaction of this scale, there’s bound to be a winner lost in the shuffle. In this case, that’s Gilead Sciences Inc. (Nasdaq: GILD).

Gilead is on the forefront of American medical breakthroughs. Its $147 billion market cap marks it as the largest drug developer in the industry. Its product portfolio and pipeline is impressive.

The company’s hepatitis C therapies are what have put Gilead in the news most recently. The company is now the leader in that huge market.

It is also been aggressively developing new therapies for cancer, AIDS, Heart Disease and diseases of the lung.

Gilead has certainly been successful on those fronts. It’s been able to consistently grow both its top and bottom lines for several years in a row. And with its top market position and aggressive acquisition strategy, it’s been able to multiply those growth rates by buying out its competitors.

But what makes Gilead really impressive is not its pipeline or its success in the merger and acquisitions market. It’s the company’s new dividend policy that makes it such a unique play right now…

Biotechs need to put a lot of their income back into their businesses to have success. After all, if you are in the drug development game, you better be funding your R&D department.

So these kinds of companies are not known for paying out large dividends to their shareholders. Gilead is breaking that rule.

It has successfully grown its drug pipeline through acquisitions. It also successfully developed and marketed several huge drugs. Now, it is moving into a new phase.

Gilead is making enough money to keep up this growth organically through its own pipeline AND pay out a dividend each quarter.

Earlier this year, the biotech giant initiated its first quarterly distribution of 43 cents per share. At $100 per share, that may not sound like much. But along with this cash dividend, Gilead also boosted its $5 billion share buyback plan by another $15 billion.

Those are huge numbers for a company in an industry not previously associated with dividends or buybacks.

This will eventually attract a whole new breed of investor. And it should help Gilead snap back from its recent decline.

The company’s dividend yield right now is just 1.7%. But it won’t likely stay this low forever. If you get in now, before it begins hiking those payments, you could be getting in at just the right moment. After all, there’s almost always a winner when the market overreacts like it has on biotechs of late. To me, that winner this time is obviously Gilead.

Risks To Consider: Gilead does still have to reinvest a great deal of its earnings back into its development programs. So it will always remain somewhat susceptible to tighter credit or periods of low liquidity. Therefore, if rates rise and debt becomes more expensive, the company may not grow its dividend as fast as it otherwise would right out of the gate. This could take even longer to recover from the recent fall.

Action To Take: To truly take advantage of the market’s most recent overreaction, as well as capture a rare chance at dividend income from the biotech industry, now’s a great time to build a position in Gilead Sciences (Nasdaq: GILD).

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