Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.
AbbVie spun off from Abbott Labs in 2013.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
AbbVie (ABBV +0.00%) was officially launched on Jan. 2, 2013 as a spinoff from Abbott Laboratories (ABT +0.00%). That was the first day the company traded on the New York Stock Exchange. The move was made so that Abbott could focus on its business of manufacturing medical devices and equipment, while AbbVie would prioritize pharmaceuticals.
AbbVie took with it the rheumatoid arthritis drug Humira, which has been the worldʻs top-selling pharmaceutical since 2012. In 2018, it did about $20 billion in global sales, and it was on pace for a similar number in 2019. Sales of Humira were basically flat in the fourth quarter of 2019 compared to the previous yearʻs quarter at $4.92 billion. However, the drug is expected to remain in the top two in worldwide sales until 2024.
Given the sustained success of Humira, how much money would you have made if you had invested $5,000 in AbbVie when the firm spun off on Jan. 2, 2013? Before we do the math, letʻs look at the company in a little more depth.
AbbVie produces Humira, the worldʻs top-selling drug. Image source: Getty Images.
But AbbVie has more than just Humira going for it. Cancer drug Imbruvica, which was the 14th best-seller in 2018, saw sales increase 28.9% in the fourth quarter, year over year, to $1.3 billion. Venclexta, another cancer drug, did $251 million in sales in the quarter (up 100%), while new immunology drug Skyrizi did $216 million in the quarter. A drug to treat Hepatitis C, Mavyret, the firmʻs third-largest seller, saw revenue decline 23% to $628 million in the quarter.
AbbVie is also closing on a deal to acquire Allergan (AGN +0.00%), the pharmaceutical company that produces cosmetic Botox, which generated $991 million in sales in 2019 -- an increase of about 9% over 2018. Bipolar depression drug Vraylar also generated net revenue of $857 million last year, up 76% from the previous year. The deal should close in the first quarter of this year.
AbbVieʻs performance has fluctuated over the years. This year, through Feb. 24, the stock is up about 5%. However, the share price has declined each of the past two years, down 3.9% in 2019 and 4.7% in 2018. But the company outperformed in 2017 as the stock rose 54.4%.
When it debuted on the NYSE on Jan. 2, 2013, AbbVie was trading at $26.33 per share. At the end of trading on Feb. 24, 2020, it closed at $93.29.
If you had invested $5,000 when it launched, your investment would have purchased about 142 shares. Over the ensuing seven-plus years, the stock has returned about 20.1% per year with a total return of about 168%. That beats the S&P 500, which returned about 14% over that same period. It also beats Abbott Labs, which posted an average annual return of about 17% over that same time frame.
Letʻs not forget dividends. AbbVie has a great track record of paying dividends, having increased them every year since inception. The company started with a $0.40 annual dividend in 2013 and has increased it almost every year since -- without reducing it once. In February, the company bumped up the dividend from $1.07 to $1.18.
So, including reinvesting quarterly dividends, that $5,000 invested on Jan. 2, 2013 would now be worth $18,377. Not a bad chunk of change.
While it's got a good track record and delivers an excellent dividend, AbbVie is in a period of transition now with Humira sales slowing down and the Allergan sale pending, so investors may want to watch and wait before picking up new shares.