Are you a pro when it comes to procrastination? Some investors take so long to make a decision on buying stocks that they miss out on great upside moves. And when those stocks pay juicy dividends, they also miss out on income.
Three Motley Fool contributors think they've found fantastic dividend stocks to buy sooner rather than later. Here's why they chose AbbVie (ABBV +0.27%), Eli Lilly (LLY 0.11%), and Gilead Sciences (GILD 0.87%).
A bright future
Keith Speights (AbbVie): You could look at where things stand right now for AbbVie and decide to avoid this stock. The drugmaker's revenue and earnings are declining. So is AbbVie's share price.
NYSE: ABBV
Key Data Points
However, savvy investors know to look ahead to a company's future rather than its present (or its past). AbbVie has a bright future ahead, in my view.
The sinking sales and profits are due to the loss of exclusivity for AbbVie's top-selling drug, Humira. Anyone who paid attention to the company knew this was inevitable.
Anyone paying attention, though, should also know that AbbVie already has two newer autoimmune disease drugs (Rinvoq and Skyrizi) on the market that should, together, significantly exceed Humira's peak annual sales by 2027. Anyone paying attention would also know that AbbVie fully expects to return to what CFO Rob Michael referred to in the latest quarterly update as "robust revenue growth" in 2025, thanks to these two drugs and other rising stars in the company's lineup.
I do think, though, that looking at AbbVie's past is warranted in one key respect. The company has increased its dividend for 52 consecutive years. That track record qualifies AbbVie as a Dividend King. Its dividend yield of nearly 4.5% is also appealing.
With AbbVie's dismal stock performance this year and a forward earnings multiple of only 12.5x, it's clear that many investors are focusing more on the present instead of the future. Sooner or later, more investors will realize what a great stock AbbVie is. That's why I think buying it sooner rather than later is a smart move.
The dividend is the icing on the cake
Prosper Junior Bakiny (Eli Lilly): Biopharmaceutical giant Eli Lilly has attracted plenty of attention this year because of its work in the diabetes and weight loss markets, where it is one of the undisputed leaders. Sales of obesity drugs are expected to skyrocket through the end of the decade, providing a significant tailwind for the company. Lilly recently earned approval in the U.S. for Zepbound to help diabetes patients manage their weight.
Zepbound was first approved last year (as Mounjaro) to treat diabetes, and since then, its revenue has rapidly grown. Now, the pace will pick up even further, an exciting prospect for Lilly and its shareholders. But there is more to the company. Lilly's entire lineup and pipeline are impressive and should help it deliver strong financial results and market-beating returns for the foreseeable future.
NYSE: LLY
Key Data Points
The drugmaker's portfolio of approved therapies includes such products as cancer medicine Verzenio and immunosuppressant Taltz, among others. Meanwhile, Eli Lilly is awaiting U.S. approval for potential Alzheimer's disease treatment donanemab. These products don't tell the whole story. It's no wonder Lilly has crushed the market this year.
And while it isn't known for its dividend, it excels in that department as well. Sure, Lilly's yield is only 0.76%. But the company has increased its payouts by an impressive 75% in the past five years. Just as important, Lilly's robust underlying business should allow it to continue rewarding shareholders with dividend increases for a long time. So, Eli Lilly is an excellent stock for growth-oriented investors and income seekers.
Gilead Sciences pays a high dividend and is an underrated growth stock
David Jagielski (Gilead Sciences): One dividend stock that looks incredibly attractive right now is Gilead Sciences. Its yield is 4%, more than double the S&P 500 average of 1.6%.
And there's an incentive to buy and hold this stock for the long haul, as Gilead has been increasing its dividend payments regularly over the years. Its current quarterly dividend of $0.75 is 32% higher than the $0.57 it was paying investors five years ago. Gilead's modest payout ratio of 64% also implies there's room for even more dividend hikes in the future.
NASDAQ: GILD
Key Data Points
Even more attractive is that the stock is trading within a few dollars of its 52-week low. And at a forward price-to-earnings multiple of less than 11, it's a relatively cheap buy. By comparison, the average healthcare stock trades at a multiple of 19.
Gilead has a solid, stable HIV business that generates single-digit revenue growth. For the three-month period ending Sept. 30, HIV product sales of $4.7 billion were up 4% year over year.
It also has a fast-growing oncology business that grew at a rate of 33% last quarter. Oncology drug Trodelvy has been particularly impressive, with its sales rising by 58% to $283 million. Gilead posts high gross margins, around 86% of revenue, putting it in an excellent position to expand its profits along with the solid revenue growth it generates.
Overall, I think this is a fantastic healthcare stock for long-term investors as it provides a good mix of stability, dividends, and growth.
