It's OK to be greedy as an investor and want more than just a good dividend yield or solid growth. Some stocks actually offer both benefits, such as AbbVie (ABBV 0.10%) and ExxonMobil (XOM 2.97%). Plus, both stocks beat the market last year and yet are still trading cheaply. Here's why it may not be too late to invest in them right now.
1. AbbVie
Drugmaker AbbVie had a strong year in 2022, with its shares rising 19% -- a mirror image of the S&P 500's performance, which fell by a similar percentage. Strong and consistent results have made the healthcare stock a popular investment to hold over the past year.
In its most recent earnings report, the company reported net revenue of $14.8 billion, up 3.3% year over year, for the quarter ended Sept. 30, 2022. And if you exclude the impact of foreign exchange rates, then the growth rate is 5.4%. Up-and-coming immunology drugs Skyrizi and Rinvoq generated impressive growth of 75% and 54%, respectively.
And AbbVie is still not firing on all cylinders as its hematologic oncology and eye care segments reported double-digit year-over-year declines -- so there's still room for the company's financials to improve even further.
Even though the stock has performed well, it trades at a relatively cheap forward price-to-earnings (P/E) ratio, which is based on analyst estimates, of 14. By comparison, the average S&P 500 stock trades at a multiple of more than 17.
Not only is AbbVie cheap and growing, but it also offers an attractive dividend that yields 3.7%, nearly two percentage points better than the S&P 500 average of 1.8%. AbbVie is also a Dividend King, enjoying a strong reputation for continued dividend growth. And with a payout ratio of less than 75%, the dividend looks to be in solid shape.
If you want a top dividend stock to own, AbbVie is an investment you won't want to overlook.
2. ExxonMobil
Oil and gas producer ExxonMobil is coming off a fantastic year that saw its share price skyrocket 80%. The market-beating stock has been one of the best places to invest of late. And at a forward P/E of 10, it still isn't an expensive stock to own.
The price of oil has been declining in recent months, but a return to normal in the economy could ensure that demand for the commodity remains high in 2023. The travel industry, for instance, may do well even amid inflation. The International Air Transport Association is projecting a profit this year, its first since before the pandemic, as it has been seeing strong demand.
A busy travel year bodes well for the price of oil, and it could mean another strong year for Exxon, which has generated profits totaling $51.9 billion over the trailing 12 months. Exxon's strong financials make the dividend look a whole lot safer -- its payout ratio is just 29%. That's a long way from the early stages of the pandemic, when there were concerns that the company might cut its dividend.
While the business isn't risk-free, as a lot still depends on the price of oil, Exxon is in a much better position today than it was just a few years ago. The stock's current yield is 3.3%, and Exxon has increased its payouts for 40 straight years.
If you're looking for a way to hedge against inflation this year or just want a solid dividend growth stock to own, Exxon can make for an excellent investment.
