AbbVie’s 4% Dividend Yield Continues Outperforming Peer Averages (ABBV)
By: Ned Piplovic,
AbbVie, Inc. (NYSE:ABBV) maintains its perfect record of annual dividend hikes since its divestiture from Abbot Labs (NYSE:ABT) in 2013, and currently rewards its shareholders with an above-average dividend yield of 4%.
The company’s current dividend yield is the third highest among its peers in the Major Drug Manufacturers industry segment and almost 60% above the simple average of the segment’s only dividend-paying companies.
While AbbVie, Inc. — as a separate legal entity — has a record of boosting dividends only for the past five consecutive years, its history of dividend payouts as part of Abbot Labs goes back several decades. In 2013 – the year of the divestiture – the combined total dividend payouts of Abbot Labs and the newly created AbbVie, Inc were higher than Abbot Labs’ total dividend payout in 2012, which constitutes an annual dividend boost. Since 2013, both companies continued to hike their respective annual dividends every year. Therefore, we can deem that the two companies have had a combined history of 45 consecutive annual dividend hikes. Since both companies are components of the S&P 500 Index and their individual market capitalizations exceed $3 billion, they are both part of the list of Dividend Aristocrats.
While AbbVie’s share price saw a slower growth rate than in the previous 18 months, it still managed a modest increase and, when combined with the rising dividend distributions, reward the company’s shareholders with a double-digit-percentage total return over the past 12 months. If the share price resumes its recent uptrend trajectory, the current share-price dip could be an opportunity to pick up a few extra shares at the currently discounted prices. AbbVie’s share price might have additional upside potential as the current level of approximately $96 is 14% below the analysts’ average target price.
Investors interested in the company’s steadily rising dividend income with additional potential of capital gains should do their research and take a position prior to the company’s next ex-dividend date on October 12, 2018. Acting prior to that date will ensure eligibility for the next round of dividend distributions on the November 15, 2018, pay date.
AbbVie, Inc. (NYSE:ABBV)
Headquartered in North Chicago, Illinois, and 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 last quarterly payout in 2018 of $0.96 is 50% higher than the $0.64 distribution from the last period in 2017. This current distribution corresponds to a 4% dividend yield, which is 25% above the company’s own 3.2% average dividend yield over the past five consecutive years.
As already indicated, AbbVie’s 4% dividend yield is the third-highest yield in the Major Drug Manufacturers market segment and nearly 130% above the segments 1.76% simple average dividend yield. Furthermore, because the average dividend yield of the overall Healthcare sector is traditionally low (0.60%), AbbVie’s 4% dividend yield is nearly 570% higher.
The steady sequence of dividend hikes over the past five years enhanced the company’s total annual dividend amount 140%. This level of advancement is equivalent to an average annual growth rate of more than 19% per year.
After more than doubling over the previous 12 months, AbbVie’s share price reached its 52-week high of $123.21 on January 22, 2018. After peaking in late January 2018, the company’s share price pulled back almost 28% before bottoming out for the year at $88.91 on July 20, 2018. However, the share price has been recovering at a lower rate, which is closer to the company’s long-term growth trend. The share price closed at the end of trading on October 3, 2018 at $96.01, which was 7% higher than it was one year earlier, 8% above the July low and 110% higher than it was at the company’s inception five years ago.
AbbVie continues to reward its shareholders with rising dividends, which combined with a moderate share price growth to generate a total return of 11% over the past year. Total returns were considerably better over the past three and five years, at 85% and 131%, respectively.
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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.