Warren Buffett appears to be selling more stocks than he's buying these days. Berkshire Hathaway (BRK.A -0.21%) (BRK.B -0.12%) recently revealed its equity holdings for the fourth quarter of 2021 in a regulatory filing. Buffett and his investment managers sold 10 stocks while buying seven stocks.
The legendary investor undoubtedly had good reasons for all of Berkshire's transactions. But that doesn't mean that every investor should blindly follow his lead. Here's one stock that Buffett is selling that income investors should instead consider buying.
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A lot to like
Buffett has steadily trimmed Berkshire's stake in big-drugmaker AbbVie (ABBV 1.08%) for several quarters. The sell-off accelerated in the fourth quarter of 2021 with a 79% reduction in shares owned, compared to the previous quarter.
However, there's a lot to like about AbbVie for income investors. The company offers a dividend that currently yields nearly 3.8%. By comparison, the average dividend yield of the S&P 500 is only 1.3%.
AbbVie's dividend is also pretty much as dependable as they come. The company is a Dividend King, with 50 consecutive years of dividend increases (including its time as part of Abbott Labs). Since spinning off from Abbott in 2013, AbbVie has raised its dividend by more than 250%.
The stock has blossomed into a big winner, as well. Over the past 12 months, AbbVie's shares soared nearly 40%. During the same period, the S&P 500 rose roughly 14%.
Despite this impressive gain, AbbVie remains attractively valued. Its shares trade at only 10.6 times expected earnings. The stock looks like a downright bargain, compared to the S&P 500's forward earnings multiple of 18.6.
One fly in the ointment
With so much to like about AbbVie, you might wonder why Buffett isn't buying the stock hand over fist. We don't know exactly what the Oracle of Omaha thinks about AbbVie. However, there's one fly in the ointment with the stock that could be on his mind.
AbbVie's autoimmune disease drug Humira faces the loss of exclusivity in the U.S. beginning in 2023. To call Humira a blockbuster doesn't go far enough. The drug generated a whopping $20.7 billion in sales last year, accounting for nearly 37% of the company's total revenue.
Is gloom and despair on the way for the big drugmaker? Not at all. Humira's sales will no doubt drop significantly after biosimilar rivals enter the U.S. market. However, the drug could still generate billions of dollars annually for years to come.
More importantly, AbbVie's broader product lineup should enable the company to quickly return to solid growth. In particular, the company has a couple of newer autoimmune disease drugs, Rinvoq and Skyrizi, and it expects them to deliver at least $15 billion of combined sales in 2025.
Different strokes
The old adage "different strokes for different folks" definitely applies to investing. All investors don't share the same goals.
Warren Buffett clearly isn't an income investor, either on a personal level or in his role managing Berkshire Hathaway. Neither he nor Berkshire need to rely on dividend income. But many investors do.
AbbVie obviously isn't a stock that's high on Buffett's list right now, based on the steep reduction in Berkshire's stake. However, with its juicy dividend and strong dividend track record, AbbVie should be high on the list of income investors.
