My #1 Dividend Stock
Marc Lichtenfeld, Chief Income Strategist
The volatility in the market is providing us with some incredible opportunities. Quality companies have gone on sale – some with much higher yields than normal.
Today, we have the chance to purchase a great company and capture a splendidly high dividend.
The healthcare sector has long been one of my favorite sectors to invest in.
That continues to this day, and it has nothing to do with COVID-19.
Global spending on pharmaceuticals is expected to increase from $1.6 trillion at the end of 2023 to $2.2 trillion by 2028.
You definitely want exposure to healthcare stocks right now and over the long term.
AbbVie (NYSE: ABBV) is my favorite large cap pharma company for capital gains and my top dividend stock for a lifetime of income.
AbbVie alone had eight drugs that generated revenues of more than $2 billion each this past year.
Humira is the bestselling drug in the world. The medication for arthritis, psoriasis, Crohn’s disease and graft-versus-host disease generated more than $14.4 billion in sales in 2023.
Cancer fighter Imbruvica scored more than $3.6 billion in revenue in 2023. Global Vraylar revenues were over $2.7 billion.
And AbbVie’s Botox sold more than $2.7 billion, and cancer drugs Venclexta and Skyrizi sold $2.3 billion and $7.8 billion, respectively by the end of 2023.
The big knock on AbbVie is that Humira is off-patent outside the United States and lost patent protection within the U.S. in 2023.
But AbbVie’s constant innovation will help make up for the loss of Humira…
Skyrizi is expected to be a more attractive alternative to Humira in the treatment of psoriasis, as it requires fewer injections per year.
Rinvoq (for arthritis) is also forecast to be a blockbuster.
Here’s what Richard Gonzalez, AbbVie’s CEO, had to say about the company’s 2023 fourth quarter and full-year results:
2023 was another outstanding year, marked by strong operational execution and significant overperformance from our non-Humira growth platform. During the year we meaningfully increased R&D investment and bolstered our pipeline with the proposed ImmunoGen and Cerevel Therapeutics acquisitions.” said Gonzalez, he continued, “2024 is an exciting year for AbbVie, as we are well positioned to fully absorb Humira erosion and achieve modest operational revenue growth, followed by a return to robust growth in 2025 and a high single-digit CAGR through the end of the decade.”
And AbbVie has a large pipeline with more potential big revenue generators.
A Massive Perpetual Dividend Raiser
For 2024, AbbVie raised its quarterly dividend another 4.7% from $1.48 per share to $1.55 per share. That $6.20 annual dividend provides a 3.6% yield.
The company has raised its dividend every year since its inception in 2013, increasing it by an astonishing 287%.
I expect AbbVie to continue to boost its payout to shareholders for the foreseeable future.
In 2023, the company generated more than $54 billion in revenue. And the company has nearly $12.8 billion in cash and cash equivalents.
It accomplished this despite the negative impacts of a weak global economy – particularly on its Allergan beauty products franchise, whose products are widely used aesthetically. (Botox is the franchise’s bestseller.)
A recession may impact Botox sales, but few people are going to stop taking their Humira for Crohn’s disease, their Tarka for high blood pressure or their Kaletra for HIV because economic times are tough.
The stock has a P/E ratio of 51.41 and price-to-earnings to growth (PEG) ratio of 2.19. These metrics tell us that the company is growing at a steady rate.
AbbVie reported worldwide net revenues of $12.31 billion for the first quarter of 2024. This is an increase of 1.6% on an operational basis. The company also successfully completed the acquisition of ImmunoGen along with its flagship cancer therapy, Elahere.
The 2024 adjusted diluted EPS guidance range was raised from $10.97 – $11.17 to $11.13 – $11.33 meaning AbbVie does not expect EPS for 2024 to be below $11.13.
Some of Wall Street’s heavy hitters must think it’s cheap too. Vanguard owns more than 9% of the shares, and BlackRock owns nearly 8%. JPMorgan Chase owns 3%.
I expect AbbVie, helped by its juicy yield, to outperform growth stocks and the entire S&P 500 as outstanding value plays take center stage.
If you don’t yet own AbbVie, now’s the time to grab some shares.
Action to Take: Buy AbbVie (NYSE: ABBV) at the market. Place a 25% trailing stop.
