Big pharma stocks AbbVie (NYSE:ABBV) and Merck (NYSE:MRK) are on very different paths right now. With its top-selling drug Humira under pressure from biosimilars, AbbVie has struggled mightily. Meanwhile, Merck's shares continue to rise, fueled largely by rising sales for its blockbuster cancer immunotherapy Keytruda.

Merck's upward momentum and AbbVie's malaise might make you think that the decision between these two stocks is an easy one to make. But there's a lot to consider as you choose between AbbVie and Merck. Here's what you need to know about these two drug stocks.  

Two people in lab coats working side by side in a lab

Image source: Getty Images.

The case for AbbVie

Dividends, valuation, and an opportunity for generating meaningful growth. Those are the three primary reasons investors should seriously consider buying AbbVie stock right now.

Let's start with the dividend. AbbVie's dividend yield currently stands at nearly 5.9%. Who wouldn't like that mouthwatering yield? The company has a strong track record of increasing its dividend to boot.

One reason why AbbVie's dividend is so high is that its share price has dropped. This decline, however, has made the stock's valuation really attractive. AbbVie's shares trade at just over 7.5 times expected earnings, making AbbVie one of the cheapest big pharma stocks on the market.

Despite the long-anticipated sales decline for Humira, AbbVie will almost certainly deliver overall revenue and earnings growth over the next several years. The company has three products already on the market that should enjoy strong sales growth: cancer drugs Imbruvica and Venclexta, endometriosis pain drug Orilissa, and new immunology drug Skyrizi.

Even better, though, AbbVie awaits regulatory approval of upadacitinib in treating rheumatoid arthritis. The drug beat Humira in a head-to-head comparison in late-stage clinical testing. Upadacitinib should be on track to become AbbVie's next huge success story.  

What about AbbVie's move to acquire Allergan? Sure, many investors view this deal as a big mistake for AbbVie. But buying Allergan definitely will reduce AbbVie's dependence on Humira. The acquisition boosts AbbVie's revenue and earnings growth prospects, even with some uncertainty for some of Allergan's top products. And AbbVie should be able to keep the nice dividends flowing even as it pays down the debt incurred with financing the transaction.

The case for Merck

What are the top three arguments for buying Merck? Keytruda, Keytruda, and Keytruda.

Merck's powerful immunotherapy is on track to become the top-selling drug in the world. Market researcher EvaluatePharma projects that Keytruda's sales will reach $17 billion, more than double the $7.2 billion generated in 2018.

Since 2014, Keytruda has picked up 21 FDA approvals for various types of cancer, including its most recent approval in treating metastatic small-cell lung cancer. Merck hopes to add at least another half dozen approved indications in the future. 

There are more good things for Merck beyond Keytruda, though. Merck partnered with Japanese drugmaker Eisai to develop and market cancer drug Lenvima. The drug is currently approved for treating kidney cancer, liver cancer, and thyroid cancer. Merck also teamed up with AstraZeneca to commercialize Lynparza, which is approved for treating breast cancer and ovarian cancer.

In addition, Merck's vaccines business continues to perform very well. HPV vaccine Gardasil is on track to generate over $3 billion in sales this year. Merck also has a promising pneumococcal vaccine in late-stage clinical testing.  

Merck's dividend currently yields nearly 2.6%. Wall Street analysts project average annual earnings growth for Merck of nearly 10% over the next five years. With the company's solid dividend thrown in, Merck should be able to provide investors with an attractive total return if those projections are on target.

Better buy

Even though AbbVie doesn't get much respect right now, I actually think it's the better pick than Merck over the long run. AbbVie is simply too cheap to ignore.

I admit that I was surprised by AbbVie's decision to acquire Allergan. But while I still think the company could have found smarter buyout candidates, my skepticism about the deal has diminished considerably.

With its fantastic dividend yield, AbbVie doesn't have to deliver much in the way of earnings growth to allow the stock's total return to reach double-digit percentages. With the company less dependent on Humira than ever before, I think AbbVie isn't nearly as risky as it might seem.

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.