There are very few constants in life. But bills coming in on a routine basis is one of them. This is what makes income investing an appealing strategy for investors to generate the cash flow necessary to fund their lifestyles.

However, not all income stocks are created equal. Yield-focused investors are arguably best off picking companies with decades of dividend growth under their belt. Counting its time as a division of Abbott Laboratories, AbbVie (ABBV 0.10%) has 51 successive years of dividend growth to its name. But should income investors buy this Dividend King? Let's take a closer look at AbbVie's fundamentals and valuation to see if an answer can be found.

AbbVie has what it takes to bounce back

AbbVie's countless medicines are prescribed by healthcare professionals to treat over 62 million patients each year. They treat a variety of common health conditions, such as cancer, atopic dermatitis, and migraine. Thanks to the breadth of its drug portfolio, it shouldn't come as a surprise that AbbVie sports a $260 billion market capitalization -- the fourth largest among drugmakers. 

AbbVie's Top-Selling Drugs Q2 2023 Net Revenue
1. Humira $4.01 billion
2. Skyrizi $1.88 billion
3. Rinvoq $918 million
4. Imbruvica $907 million
5. Botox Therapeutic $748 million

Data source: AbbVie.

The pharmaceutical company recorded $13.9 billion in net revenue during the second quarter ended June 30 -- down 4.9% over the year-ago period. But when taking into consideration the 0.7% foreign currency translation headwind due to the outperformance of the U.S. dollar, net revenue fell by just 4.2% year over year for the quarter.

As an investor, it's always tough to see a decline in revenue. But after years of massive success from a drug, that's just the nature of the beast, especially in the pharmaceutical industry. Biosimilar competition in the U.S. and abroad led Humira's total revenue to retreat by 25.2% in the second quarter. The good news is that due to patient share gains and continued regulatory approvals, popular immunology drugs Skyrizi and Rinvoq both grew net revenue by 50%-plus rates during the quarter. Double-digit net revenue growth from Botox Therapeutic, anti-psychotic drug Vraylar, and cancer therapy Venclexta also helped to mostly offset deteriorating Humira sales. 

AbbVie's non-GAAP (adjusted) diluted earnings per share (EPS) decreased by 13.6% over the year-ago period to $2.91 for the second quarter. A reduced revenue base caused the company's non-GAAP net margin to contract by nearly 390 basis points year over year to 37.3% in the quarter. AbbVie's weakened profitability was only partially offset by a lower share count, which is how its adjusted diluted EPS dropped at a faster rate than net revenue during the quarter. 

With an eye toward the future, the company should almost certainly revert to growth starting next year. For one, AbbVie's top-selling non-Humira drugs are all growing at healthy rates. Not to mention that the company's recently launched cancer treatment co-owned with Genmab, Epkinly, could be an eventual blockbuster. Finally, there are over 50 other drugs that are in mid to late-stage development. This means that AbbVie will be launching multiple other potentially promising medicines in the next few years. 

A customer shops at a pharmacy.

Image source: Getty Images.

Dividend growth can persist

Compared to the S&P 500 index's 1.5% dividend yield, AbbVie's 4% yield likely stands out to income investors. And with the quarterly dividend per share having been boosted by 54.2% in the past five years, the company is an all-in-one growth play and income play. 

AbbVie's dividend payout ratio is positioned to clock in at less than 54% for 2023. Even with Humira's recent challenges, this temporarily elevated payout ratio still leaves the company with the funds needed to invest in business growth, reduce debt, and complete share buybacks. Thus, moderate dividend growth in the mid-single digits annually doesn't seem out of the question moving forward.

Valuation makes AbbVie stock a buy

Having rallied 10% in the past month, share prices of AbbVie aren't as compelling of a value proposition now as they were not long ago. But with a forward price-to-earnings (P/E) ratio of 13.4 coming in just above the drug manufacturers' industry average forward P/E ratio of 13.3, shares remain a solid value for investors seeking growing passive income