AbbVie Offers 2.9% Dividend Yield, 40%-Plus Above Peer Average (ABBV)
By: Ned Piplovic,
AbbVie, Inc. currently offers its shareholders a 2.9% dividend yield, which exceeds the average yield of the company’s drug manufacturing peers by more than 40%.
In addition to the better-than-average yield, the company has enhanced its annual dividend payout every year since 2013. Over the past year, the company grew its share price significantly, which combined with the rising dividend income to reward Verizon’s shareholders with a total return of more than 60% for the year.
The company’s next ex-dividend date will occur on January 11, 2018, and the pay date will occur a little more than a month later on February 15, 2018.
AbbVie, Inc. (NYSE:ABBV)
Founded in 2013, when Abbot Labs (NYSE:ABT) divested its proprietary pharmaceutical business, AbbVie Inc. discovers, develops, manufactures and sells pharmaceutical products. The most prominent pharmaceutical brands in the company’s current portfolio are HUMIRA for the treatment of autoimmune diseases, IMBRUVICA for the treatment of patients with chronic lymphocytic leukemia and VIEKIRA PAK for the treatment of adults with hepatitis C. Additionally, AbbVie offers pharmaceutical treatments for HIV, hypothyroidism, prostate cancer, endometriosis, anemia, Parkinson’s disease and multiple sclerosis, as well as treatments for testosterone replacement therapy and pancreatic enzyme therapy for exocrine pancreatic insufficiency. The company’s headquarters are in North Chicago, Illinois.
The company advanced its quarterly distribution 10.9% from $0.64 in the previous quarter to the current $0.71 quarterly distribution. This new quarterly distribution is equivalent to a $2.84 annualized payout and yields 2.9%. AbbVie’s current 2.9% yield is 43.6% higher than the average dividend yield of the Drug Manufacturers market segment and it is 360% higher than the average dividend yield of the entire Health Care sector.
Since starting to pay dividends as an independence business entity in 2013, the company enhanced its annual payout every year at an average growth rate of 11.3% per year. This growth rate resulted in a 71% increase of ABBV’s total annual dividend amount over the last five consecutive years.
When Abbott Labs divested its proprietary pharmaceutical business in 2013 and AbbVie Inc. became a separate legal entity, Abbott Labs dropped its total annual dividend payout from $2.01 in 2012 to $0.56 for 2013. At the same time, AbbVie paid a $1.66 total dividend in 2013. Therefore, the combined annual dividend payout of $2.16 for both companies in 2013 was higher than Abbott Labs’ 2012 distribution of $2.01. Both companies have continued to boost annual dividends every year since 2013. Therefore, we can consider their records of consecutive dividend hikes as continuations of the 41-year rising dividends record that Abbott Labs had prior to the 2013 divestiture. Under that assumption, AbbVie’s current streak of annual dividend hikes is 46 consecutive years. Therefore, ABBV would meet all the criteria – S&P 500 company with a market capitalization exceeding $3 billion and more than 25 consecutive years of dividend hikes – for the Dividend Aristocrats designation.
AbbVie’s share price has been rising since the company’s formation in 2013 and elevated its growth rate significantly since October 2016. The share price grew 16.6% between December 22, 2016, and August 18, 2017. However, since August 18, 2017, the share price rose 40%. That means that 71% of total growth in the past 12 months occurred during the last one-third of the period.
Initially, the share price fell 2.7% in the first month of its trailing 12-month period. After that small drop, the share price ascended more than 60% to reach its 52-week high of $98.19 on December 18, 2017. Since then, the share price traded in the same range and closed on December 21, 2017, at $97.91, which is 58.8% higher than it was one year ago, 63.2% higher than the January 52-week low and 184% higher than the share price at the company’s formation on January 1, 2013.
The combination of fast-rising dividend income and significant share price growth rewarded AbbVie’s shareholders with a 62% total return over the past 12 months and a 213% total return since the company became a separate business entity in 2013.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.