The healthcare sector offers income-seeking investors plenty of attractive stocks to consider. AbbVie (ABBV 1.26%) and Pfizer (PFE -0.97%) especially stand out. In this Motley Fool Live video recorded on Jan. 19, Motley Fool contributors Keith Speights and Brian Orelli discuss which of these two dividend stocks is the better pick right now.
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Keith Speights: Let's go to our final topic before we get to questions. Now, not all of our Motley Fool members are as interested in aggressive growth. We do have quite a few income-oriented investors out there.
AbbVie and Pfizer rank as two of the most widely followed healthcare dividend stocks. Brian, which of these two -- AbbVie or Pfizer -- do you think is the better choice for income investors and why?
Brian Orelli: AbbVie would seem to have the advantage given its dividend yield of 3.9 percent, Pfizer's dividend yields only 2.9 percent. But even dividend investors should be looking at total returns.
By that measure, I think Pfizer could outpace AbbVie. One of the reasons why AbbVie has such a large dividend yield is that investors are expecting a major decline in revenue due to the competition from biosimilars of Humira. That's its largest-selling drug. In the third-quarter sales of Humira were $5.4 billion of the $14.3 billion total. Basically, it makes them more than a third of AbbVie's total sales.
Pfizer faces some patent cliffs as well. But I don't think they are nearly as severe. Plus Pfizer has the potential for growing sales of its COVID-19 vaccine and its COVID-19 treatment that just came on the market. So I think overall, I think Pfizer is the better prospect because of its potential to grow revenue compared to AbbVie's.
Speights: You make a good point. Don't just look at the dividend, even if you're looking for income, look at the overall prospects. And I think you're right, Pfizer, overall, is the better pick.
Having said that, I do think AbbVie is a pretty good pick for income investors. I mean, it does have that great dividend yield. It's a Dividend Aristocrat. It very soon should be a Dividend King with 50 consecutive years of dividend increases.
I think the company has a pretty good strategy in place for its post-Humira world. I think it's still a good pick for dividend-seeking investors. But I think you're right, Pfizer's the better choice overall.
