Abbvie (ABBV) Dividend Aristocrat Review

  Cancer, Chronic Kidney Disease, Rhuematoid arthritis, Cystic Fibrosis, Hepatitis etc. etc. Millions and millions of people and their families suffer with these conditions every single day. And thank goodness for science and modern medicine that has developed pharmaceuticals to help manage these conditions, reduce pain, and allow people to live effective and productive lives again. These pharmaceuticals take years to develop effectively and become very valuable products in the healthcare marketplace. Enter Abbvie, a spinoff from Abbot Labratories. AbbVie is a global pharmaceutical producer that manages operations globally.

Why Abbvie?

What makes AbbVie an attractive long-term buy for investors is that it makes drugs that patients desperately need. From hepatitis to oncology to chronic kidney disease, AbbVie helps many patients around the world with its products. Like many large pharmaceutical players, one way that AbbVie has been able to grow over the years has been via acquisitions.
“The company concentrates on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology, and dermatology; oncology, including blood cancers, virology, including hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson’s disease and multiple sclerosis; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis, and other serious health conditions.
In other words, it tackles many major health issues that negatively impact millions! In three years, the company’s sales have grown from $22.9 billion to $32.8 billion this past year (those are “B’s” for billions), for an increase of 43%. The stock’s dividend of around 5.7% per year makes it even more attractive for folks looking for income. Abbvie has also raised its dividend payments by nearly 170% over the past six years and is a Dividend Aristocrat. This is thanks in part since it was spun off from Abbott Labs, a company that has increased its dividends for 47 straight years.

Dividend Payout: $4.72/share per year. Paid quarterly at approximately $1.11/share.

Buy 100 shares and receive $472/year in income!

Dividend yield of 4-5%

Earnings per share $2.73

Ken Faulkenberry gives the Dividend score a total of 59/100 (50 being average) Abbvie stock price appears to be a value at the moment. The price was punished recently after a deal to acquire Botox founder Allergan.

Challenges

One challenge that AbbVie faces is that over half of its business is concentrated in one product, Humira.This wonder drug treats arthritis, plaque psoriasis, etc. While this can work for some companies that have powerful brands (for example: Clorox), it’s a risk in AbbVie’s market of branded pharmaceutical drugs and makes the stock less desirable. [UPDATE: 10/7/19] Jerry was so excited by my AbbVie write up that he decided to trade a covered call in it. He entered at 73.81, with a strike of 77.50, collecting a 1.12 credit bringing his cost basis down to 72.69. What’s more, it goes ex-dividend on Friday so his shares are going to get him a 1.07/share dividend payable on Nov 15, even further reducing his cost basis! His only risk is the risk of holding through earnings. [UPDATE: 10/19/19] Since recommending this stock, Jerry has seen ABBV appreciate to 76.46. His upside potential can go all the way to 77.50 due to the covered call. He’s also holding through the ex-dividend date so he will get a nice 1.07/share dividend on the 15th. That’s a profit of about 4.84, assuming the stock doesn’t move dramatically between now and 11/15.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: