Yahoo Finance Why AbbVie (ABBV) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
AbbVie in Focus
Headquartered in North Chicago, AbbVie (ABBV) is a Medical stock that has seen a price change of 10.58% so far this year. Currently paying a dividend of $1.55 per share, the company has a dividend yield of 3.62%. In comparison, the Large Cap Pharmaceuticals industry's yield is 2.4%, while the S&P 500's yield is 1.61%.
In terms of dividend growth, the company's current annualized dividend of $6.20 is up 4.7% from last year. AbbVie has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 8.25%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. AbbVie's current payout ratio is 57%. This means it paid out 57% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ABBV expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $11.27 per share, representing a year-over-year earnings growth rate of 1.44%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ABBV is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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AbbVie Inc. (ABBV) : Free Stock Analysis Report
