Where does AbbVie (ABBV) rank after its 12% announced dividend increase?

abbv

Summary:  AbbVie (ABBV) is a large diverse pharmaceutical company that develops products to treat a range of diseases.  AbbVie is a product of the split of two companies in October 19, 2011 by Abbott Laboratories. AbbVie was officially listed on the NYSE on on January 2, 2013. Although the company has a shorter length to its dividend history, its former parent Abbott Laboratories has paid dividends consistently since 1924 and has increased the dividend payout for 44 consecutive years. AbbVie (4.4%) now pays a higher dividend yield than the former parent Abbott Laboratories (2.2%).  AbbVie raised its current dividend by 12%. AbbVie also reported quarterly results with revenue up 8% to $6.43 billion while earnings climbed by 7.1% to $1.21. The large concern in the report were weaker than expected Humira sales. Humira accounts for $4.06 billion of total sales. The quarterly report results were panned by most analysts and the stock fell by 6.3% to $57.60. With the price drop, the yield is now a very high 4.4%  The quarterly dividend for February’s payment will be $0.64 versus the prior year rate of $0.57 per share. The overall yield is now well above that of the S&P 500 and at the higher end of AbbVie history. Although there are many positives to AbbVie including a high yield and strong credit rating, AbbVie does not qualify as a member of our Top 100 Dividend Stock List (see below).

The new dividend  of $0.64 will be paid at the new higher rate on February 15, 2017, to shareholders of record at close of business on January 13, 2017. AbbVie Inc. is currently priced at $61.46. Listed in the table below are the quarterly dividend payments since 2013.

Date Quarterly Dividend
1/13/2017 0.64
10/12/2016 0.57
7/13/2016 0.57
4/13/2016 0.57
1/13/2016 0.57
10/13/2015 0.51
7/13/2015 0.51
4/13/2015 0.51
1/13/2015 0.49
10/10/2014 0.42
7/11/2014 0.42
4/11/2014 0.42
1/13/2014 0.4
10/10/2013 0.4
7/11/2013 0.4
4/11/2013 0.4
1/11/2013 0.4

Analysis of AbbVie Inc. is based upon our five key criteria for the Top 100 list, which include; 

Category Value Score
Dividend Yield 3.74% 77
Dividend Growth (3 year avg) 12.8% 166
Forward P/E 10.19  26
S&P Financial Rating A-  120
Beta 1.10 150
Total Score    539

Additional Information on P/S ratio and historical yield;

% Yield 3 Year Div. Growth Rate 6 Year Div. Growth Rate SPS 2016 P/S Ratio 10 yr P/S Low 10 yr P/S High 5 yr max Yield % 5 yr low Yield %
4.41% 12.8% NA 16.10 3.7 3.1 5.2 4.41% 2.40%

Final Analysis;

Positives;

  • AbbVie’s dividend yield is above that of the S&P 500 Index.
  • AbbVie maintains a 3 year dividend growth rate of 12.8%.
  • AbbVie is trading at a forward P/E ratio below the market. Additionally, its also trading at a price/sales (P/S) ratio lower than its historic average.  From a relative valuation perspective, AbbVie is undervalued.
  • AbbVie maintains a solid investment grade rating.
  • AbbVie current dividend yield (3.74%) is above its historical average dividend yield of 3.21%.

Negatives;

  • AbbVie maintains a beta of 1.10, higher than the average company.
  • AbbVie is highly reliant on one major drug Humira, a large risk.

Based upon its high beta and reliance upon Humira, AbbVie Inc. does not qualify as one of our Top 100 Dividend Stocks.

AbbVie Inc. Dividend Yield Historical Chart (Click to enlarge)

abbv2

Chart Explanation:  Dividend growth stocks may be viewed undervalued when the current yield is above historical readings for the past 5 years. 

Further information on dividend investing and evaluating dividend growth candidates can be found at http://seekingalpha.com/author/timothy-mcintosh/articles

One thought on “Where does AbbVie (ABBV) rank after its 12% announced dividend increase?

  1. While ABBV still has some risks as any pharma stock has really, the current yield and nice dividend growth should keep it in my portfolio for many years to come. In fact, I just added to my ABBV last week after the ABC, MCK, CAH bloodbath took ABBV down too. Thanks for sharing.

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