Many investors hold a stake in AbbVie (ABBV -0.85%) because it offers exposure to the healthcare sector. Industry-based diversification, however, isn't all the pharmaceutical outfit brings to the table. AbbVie is also a quality dividend stock. If you're looking for a name that serves such a dual purpose, this one is worth considering.
AbbVie's plan for life after Humira
AbbVie is the company behind cancer-fighting Imbruvica as well as arthritis/Crohn's disease treatment Skyrizi. Its claim-to-fame drug, however, is rheumatoid arthritis therapy Humira -- its top-selling product last year, accounting for one-fourth of companywide revenue of $54.3 billion.
This won't be the case much longer. Humira lost its patent protection last year, allowing competing drugs onto pharmacies' shelves. Humira's revenue slumped 35% year over year in Q1, confirming that competitive headwinds are already blowing. Investors are understandably concerned that AbbVie's dividend may be threatened.
This worry may not be merited, however.
Although no single drug could immediately replace Humira's revenue, earlier this year the company suggested sales of Skyrizi could swell from last year's $7.8 billion to more than $17 billion by 2027. Meanwhile, sales of rheumatoid arthritis therapy Rinvoq could improve from $4 billion per year now to more than $10 billion during the same time frame.
And that's just two of its drugs. Others should see similar growth.
The point is, AbbVie can replace Humira... in the aggregate. The stock's dividend payments can be sustained without strain.
What is the dividend payout for AbbVie stock?
As it stands right now, AbbVie is paying quarterly dividends at an annualized $6.20 per share versus yearly per-share earnings of $12 to $13. The dividend's also been consistently raised every year for many years now, yet there's plenty of capacity to continue raising it while the company weens itself from Humira.
As for the stock's dividend yield, it presently stands at an above-average 3.9%, although within the past 12 months the yield's been as high as 4.4% and as low as 3.3%... in line with its average for the past decade.
