If you've got some cash stored up, consider yourself a wise investor -- and fortunate. Now could be a great time to put that cash to use toward an investment in these three Dividend Kings that could provide robust returns for a lifetime.
Shares of AbbVie (ABBV -0.55%), Lowe's (LOW -2.71%), and Parker Hannifin (PH -0.85%) more than tripled over the past 10 years as investor confidence remained strong. But share price growth is just one part of the long-term investment story for these companies.
AbbVie is finding ways to treat patent expiration anxiety
AbbVie was spun off from Abbott Labs in 2013 as a research-based pharmaceutical business. Since then, AbbVie has increased its dividend by more than 250%. The company's annual dividend of $5.64 per share is paid at a yield of 3.71% -- double that of the S&P 500's 1.86% long-term average. That's just one of the reasons why this Dividend King is part of Warren Buffett's Berkshire Hathaway portfolio.
Year-over-year revenue rose 4% during the first quarter, driving earnings higher by 9% for the same period. But the impact of patent expirations drove an 18% decline in sales of AbbVie's top-selling drug, Humira, due in part to biosimilar drugs from competitors Amgen and Biogen, which have been commercially available internationally since 2018. U.S. sales of Humira are expected to decline in 2023, once it loses exclusivity there, where Amgen, and Biogen have already received FDA approval for its biosimilar drugs.
The good news is that a robust drug portfolio is helping offset the decline in Humira. AbbVie saw an average 21% year-over-year increase in sales across its aesthetics and neuroscience portfolios, led by strong demand for Botox Cosmetic, Juvederm, and the newly launched oral migraine drug, Ubrelvy. Immunology drug sales of Skyrizi and Rinvoq, which rose 66% and 57%, respectively, for the quarter on a year-over-year basis should also help Humira's sales.
Momentum is growing for these two drugs as AbbVie expands their use into new markets. Skyrizi has 23% of total prescription share in U.S. biologics, and a leading position with 40% share in treating psoriasis. Meanwhile, Rinvoq market share could jump from 5.5% to the mid-teens based on new patient starts and repeat prescription data from AbbVie's Bridge program, which allows arthritis patients to try the product for free until the patient's coverage plan includes that drug.
With revenue and earnings both showing growth, and a plan in place for its robust product portfolio, AbbVie should sustain its annual dividend increases and provide passive income to investors for many years to come.
Lowe's provides the tools to build a foundation
Lowe's is the second-largest home improvement store chain, boasting an annual dividend of $3.20 at a yield of 1.70% -- not exactly at the level of AbbVie. So, why might investors buy this Dividend King? A $13 billion stock repurchase program, an annual dividend that has increased for 59 consecutive years, and a 15.7 P/E ratio -- lower than the S&P 500's 19.54 average -- are just a few reasons.
In 2021, 6.9 million homes were sold in the U.S., with that number expected to inch upward this year to 7 million. Rising interest rates and strong demand, coupled with sellers looking to cash in on high prices is creating an environment where houses barely stay on the market for a few days, if even listed publicly at all. The good news for Lowe's investors is that even if rates continue to rise and housing sales slow, homeowners who recently moved will likely be making plenty of visits to one of its 1,971 stores, or will start projects that will keep pro contractors visiting. Let's also not forget the new home build communities already under development, which should drive more sales of home building products.
Comparable store sales increased by 6.9% in 2021, supported by a 5% jump in Q4. Those results helped push the company to raise its 2022 guidance for total revenue, and for earnings to come in 2.7% higher than the top end of previous forecasts. Q1 earnings due out on May 18 should provide a near-term look into if the company will remain on course for those expectations. If all is well, long-term investors could be looking at an excellent opportunity to get in at a discount on a stock down 23% this year that will produce big gains, and an annual dividend that will continue to increase for a 60th consecutive year and beyond.
Parker Hannifin's technology is in demand
Aside from two swift drops -- Q1 2020 and the recent landslide since November -- shares of this global leader in motion and control technologies have been climbing steadily. Parker Hannifin stock has gained 227% over the past 10 years, and shares rose 320% as recent as November. But the stock price isn't the only thing growing -- so are the dividends.
Investor excitement is building on the heels of an announced 29% jump in quarterly dividend payout taking place on June 3 for shareholders on record as of May 13. That puts the annual dividend amount at $5.32 per share at a yield of 2%. If you missed out on that dividend increase, it's probably not worth sweating over. This Dividend King has increased annual dividends consecutively for 66 years. This most recent increase should only provide additional reason to think that its days as a king are far from over.
On May 5, Parker provided upward revised revenue guidance for fiscal 2022 despite headwinds from COVID-related shutdowns in China, growing inflationary pressures, supply chain disruption, and labor force challenges. Q3 sales increased 9% year over year to $4 billion, driven by an increase in orders across both the diversified industrials and aerospace segments.
What's more, the market for products in motion control technology is growing at a 2.5% compound annual growth rate as companies strive to improve the speed, precision, and cost efficiency of processes. Robotics and automation within sectors such as automotive, energy, smartphones, and aerospace -- for companies like Boeing and Lockheed Martin -- should continue to drive forward as those sectors evolve.
Parker manufactures hundreds of thousands of products, which gives it a deep portfolio. No single product was responsible for more than 1% of total net sales last year, meaning it can minimize the risk that may be associated with a portfolio reliant on a primary product. That minimized risk, along with projected market growth and demand for optimized processes, should bode well for Parker to continue generating income to support lifelong dividends.