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AbbVie Stock Is Perfect for Dividend Portfolio

Abbvie stock

AbbVie (NYSE: ABBV) stock appears like a good play for dividend investors due to its history of increasing dividends at a double-digit rate. In addition, the company’s product line and financial numbers are offering support to dividend payments. The company has increased dividends in the last seven years in a row. It recently lifted the quarterly dividend by 10.3% for the following four quarters.

Besides dividends, ABBV share price has also been rallying at a steady pace. AbbVie stock jumped close to 40% in the past three years. The shares are currently standing around 52-weeks high of $90. Moreover, ABBV share price is trading at attractive valuations considering the price to earnings ratio of 9.86.

ABBV AbbVie Inc. daily Stock Chart

Dividend Growth is Safe

AbbVie’s dividend growth is safe. This is because of sustainable growth in financial numbers. The company has generated revenue growth of 3% in the latest quarter, driven by robust growth from the Hematologic Oncology segment. ABBV’s earnings per share jumped 6% year over year in the latest quarter.

Strong performance from our Immunology and Hematologic Oncology portfolios led our growth this quarter. We are also making excellent progress with several key strategic priorities, including the recent launch of our two new immunology therapies,” said Richard A. Gonzalez, chairman, and chief executive officer.

The free cash flows are covering dividend payments. It generated an operating cash flow of $4.5 billion in the latest quarter compared to dividend payments of $1.6 billion. Thus, the huge gap in dividend payments and cash flows puts the company in a position to raise the dividend in the future.

Strong Outlook Supports AbbVie Stock

AbbVie expects to generate steady revenue and earnings growth for the full year. It anticipates full-year diluted earnings per share in the range of $5.69 per share, representing a high double-digit growth from last year. Consequently, the company’s cash flows are likely to increase at a similar pace, which will further enhance its cash returning potential. Overall, AbbVie stock looks like a good play for dividend investors.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.