Tags: abbvie | dividend | aristocrat | top | stock | buy

AbbVie: This Dividend Aristocrat Is Top Stock to Buy Now

AbbVie: This Dividend Aristocrat Is Top Stock to Buy Now

Piotr Trojanowski | Dreamstime.com

By
Wednesday, 29 May 2019 02:20 PM Current | Bio | Archive

It is not often that investors have the opportunity to buy a stock with growth potential, a high dividend yield, and a low valuation. But that is exactly the opportunity at hand with AbbVie Inc. (ABBV).

Shares of the pharmaceutical giant have declined 15% so far in 2019, compared with a 10% gain for the S&P 500 Index year-to-date.

AbbVie’s under-performance is the result of the company’s flagship product, Humira, facing biosimilar competition in Europe. Competition to Humira will heat up in the U.S. in 2023, adding uncertainty to the company’s future outlook.

However, AbbVie has invested heavily in new product development to fuel future growth. In the meantime, the company remains highly profitable with a high dividend yield above 5%, making it one of the best dividend stocks to buy today.

AbbVie’s Plan For Growth

AbbVie continues to execute on its growth plan. It delivered a strong first-quarter earnings report in which Humira sales fell, but less-than-feared. Revenue of $7.8 billion increased 0.4% on an operational basis (excluding currency). Humira dragged AbbVie down last quarter, with a 5.6% sales decline. However, other products helped make up for the shortfall. Revenue growth plus share repurchases fueled 14% adjusted EPS growth for the quarter.

Investors should note the lingering uncertainty facing Humira, which is now facing biosimilar competition in Europe. This caused international sales of Humira to decline 23% last quarter. Humira will face biosimilar competition in the U.S. in 2023, which poses a threat as Humira makes up approximately 60% of the company’s total revenue.

However, AbbVie has invested heavily in R&D, and now has a robust pipeline of future products to offset Humira’s decline. For example, Imbruvica sales increased 34% to over $1 billion last quarter. Overall, AbbVie’s hematologic oncology portfolio grew revenue by 43% last quarter. Venclexta and Imbruvica are expected to add $9 billion in annual revenue by 2025. Separately, AbbVie’s next-generation immunology drugs Upadacitinib and Risankizumab will generate over $10 billion in sales by 2025. In all, AbbVie expects non-Humira product sales to exceed $35 billion by 2025.

Value, Dividends And Growth In One Stock

AbbVie expects adjusted earnings-per-share in a range of $8.73 to $8.83 for 2019, representing 11% full-year adjusted EPS growth at the midpoint of guidance. Based on this, the stock is valued at a price-to-earnings ratio of just 8.8x. This is a very low valuation. Fair value for a high-quality stock like AbbVie could be 13, which would result in a significant boost to shareholder returns through a rising share price.

In addition, AbbVie stock is expected to grow EPS by 9% over the next five years. And, AbbVie has a 5.4% dividend yield. This results in total expected returns well above 20% per year for this dividend growth stock.

Going back to its days as a subsidiary of Abbott Laboratories (ABT), AbbVie has increased its dividend for over 30 consecutive years. AbbVie is a Dividend Aristocrat, a group of 57 stocks in the S&P 500 Index with at least 25 consecutive years of dividend increases.

With a high yield above 5%, strong growth potential, and an attractive valuation, AbbVie is one of the best dividend stocks to buy right now.

Ben Reynolds is CEO of Sure Dividend. Sure Dividend helps individual investors build high quality dividend growth stock portfolios for the long run.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
BenReynolds
It is not often that investors have the opportunity to buy a stock with growth potential, a high dividend yield, and a low valuation. But that is exactly the opportunity at hand with AbbVie Inc. (ABBV).
abbvie, dividend, aristocrat, top, stock, buy
553
2019-20-29
Wednesday, 29 May 2019 02:20 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved