They're partners. And they're rivals. AbbVie (NYSE:ABBV) and Johnson & Johnson (NYSE:JNJ) co-market fast-growing cancer drug Imbruvica. However, the two big drugmakers compete against each other in the autoimmune disease market. 

Johnson & Johnson has been a longtime favorite among investors. AbbVie has arguably been the best big pharma stock in recent years. But which is the better pick for investors now? Here's how AbbVie and J&J compare in the key categories of growth prospects, dividends, and valuation.

Male and female scientists in lab

Image source: Getty Images.

The case for AbbVie

There are several kinds of growth, but they're all intertwined. Revenue growth typically leads to earnings growth, and both tend to drive stock price growth. AbbVie appears to be in good shape on all three counts in the coming years.

The company recently increased its 2020 sales estimate for Humira from $18 billion to $21 billion. With Humira generating nearly two-thirds of AbbVie's total revenue, that's huge for the drugmaker's growth prospects. Other current products should also contribute to AbbVie's growth. Imbruvica is on track to become the fourth-best-selling cancer drug in the world by 2022. Recently launched hepatitis C drug Mavyret should also be a big winner. Venclexta isn't making much money yet, but additional cancer indications could greatly expand the market for the drug.

AbbVie's pipeline also ranks as one of the best among big pharma companies. Potential blockbuster candidates include elagolix, which targets treatment of endometriosis and uterine fibroids, autoimmune disease drugs upadacitinib and risankizumab, and cancer drug Rova-T. 

Although AbbVie is experiencing sales declines for some of its older hepatitis C and HIV drugs, those products combined make up for only a small percentage of total revenue. Overall, Wall Street analysts project average annual earnings growth for AbbVie of nearly 16% over the next five years.

The impressive cash flow produced by Humira and (to a lesser extent) AbbVie's other drugs has allowed the company to reward shareholders with one of the best dividends in healthcare. AbbVie's dividend currently yields a little over 3%. The company has increased its dividend nearly 78% since being spun off by Abbott Labs in 2013.

Despite its year-to-date gains of close to 50%, AbbVie shares trade at only 14.4 times expected earnings. With its strong growth prospects, the stock appears to be a bargain at the current price.

The case for Johnson & Johnson

Johnson & Johnson stands as the largest healthcare company in the world, with three multibillion-dollar business segments. J&J's consumer business, which includes well-known brands such as Band-Aids and Listerine, is growing sales, but only by low single-digit percentages. Its medical device segment is enjoying stronger growth in higher single-digit percentages, thanks primarily to acquisitions.

The most important growth engine for Johnson & Johnson is its largest business: the pharmaceutical segment. Several products are largely responsible for driving that growth, especially Imbruvica (for which J&J receives a smaller percentage of sales than AbbVie, though), blood cancer drug Darzalex, and Stelara, which treats psoriasis and psoriatic arthritis. In addition, J&J's acquisition earlier this year of Actelion gave the company a growing pulmonary hypertension franchise. 

What about J&J's pipeline? Market research firm EvaluatePharma ranked the company's apalutamide as the third-most-promising cancer drug in late-stage development. Other promising candidates include antidepressant esketamine, acute myeloid leukemia treatment talacotuzumab, and cancer drug erdafitinib. 

The challenge for Johnson & Johnson, though, is overcoming headwinds for several existing drugs. J&J's current top-selling drug, Remicade, faces competition from biosimilars. Several of its top drugs experienced year-over-year sales declines of 10% or more in the last quarter, including neuroscience drugs Concerta and Risperdal Consta, cancer drug Velcade, diabetes drug Invokana, and anemia drug Procrit. Because of some of these issues, Wall Street analysts project that J&J will grow average earnings by only 7% over the next five years despite its promising pipeline.

J&J's dividend is solid, with a yield of 2.37%. The company's track record of 55 consecutive years of dividend hikes is even more impressive.

As for valuation, J&J stock trades at nearly 17.6 times expected earnings. That's not cheap, but it's a little lower than the S&P 500's forward earnings multiple. 

Better buy

AbbVie clearly has better growth prospects than J&J does. Its dividend yield is higher. I don't see that advantage going away any time soon, either, with AbbVie continuing to make double-digit percentage dividend increases each year. And the stock is even a better value than J&J. 

Johnson & Johnson is a great long-term pick for investors. However, in my view, AbbVie is the better stock right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.