Many people set a goal to save $1 million for retirement. This amount may or may not be sufficient in today's economy, but it's at least a good start. And to get there, investing in stocks is an excellent strategy. Buying shares of the right companies -- those that can generate generous returns for decades -- will help significantly increase anyone's wealth. Which specific companies should one invest in?
Let's consider two excellent options: AbbVie (ABBV 2.24%) and Novo Nordisk (NVO 0.15%).
NYSE: ABBV
Key Data Points
1. AbbVie
AbbVie was once a division of the leading medical device company, Abbott Laboratories. The drugmaker started trading on the market in 2013, and since then, it has delivered market-beating returns.
ABBV Total Return Level data by YCharts.
True, AbbVie's most important drug through most of those years, rheumatoid arthritis medicine Humira, is now out of patent exclusivity. However, the company is handling that loss just fine. Other therapies have managed to fill the massive hole Humira left behind, particularly Skyrizi and Rinvoq, two immunology medicines that significantly overlap with Humira's indications. According to management, these two superstars will continue to grow their sales into the next decade.
There are many other products AbbVie can count on, from migraine medicine Qulipta to its Botox franchise. And, of course, investors can expect the company to earn brand-new approvals, be it thanks to internally developed medicines or through acquisitions (which is how it got its Botox products). AbbVie's pipeline features several dozen ongoing clinical trials across many therapeutic areas.
So, the drugmaker's revenue and earnings will generally move in the right direction. They are doing so now, even after Humira's patent cliff. AbbVie can also significantly increase investors' wealth through its dividend program. Including the time it spent as a division of Abbott Laboratories, the company is a Dividend King and has raised its payouts for 52 consecutive years.
Since it became a stand-alone company, AbbVie's dividend has increased by 310%. The company's forward yield is about 4%, while its cash payout ratio is conservative enough at just under 48% and leaves plenty of room for more increases. Those who opt to reinvest the dividend here will see significant improvements over what should already be strong returns. That's how AbbVie can help investors become millionaires in the next few decades.
NYSE: NVO
Key Data Points
2. Novo Nordisk
Novo Nordisk has been a pharmaceutical leader for decades. The company has made significant breakthroughs, particularly in diabetes, where it is a leader. Novo Nordisk is currently riding rapidly growing market for weight loss drugs. The drugmaker's famous medicine, Wegovy, is one of this space's best sellers. Novo Nordisk's work in this area has allowed it to generate strong revenue and earnings in recent years.
NVO Revenue (Annual) data by YCharts.
It is developing several more that could earn approval within the next few years. Further, semaglutide, the active ingredient in Wegovy and Ozempic (a diabetes medicine), is still undergoing clinical trials for potential billion-dollar indications. They include metabolic dysfunction-associated steatohepatitis (MASH) and Alzheimer's disease. Both of these areas have high unmet needs.
The U.S. Food and Drug Administration (FDA) approved just the first MASH treatment last year, although some 22 million patients in the U.S. live with the disease (including 9 million with clinically significant liver disease), according to some estimates.
And while Alzheimer's affects about 7 million people in the U.S., very few medicines for the condition have earned the green light in the past two decades. Novo Nordisk's work here could lead to key label expansions. The company's pipeline also features investigational therapies across many other areas, from its core expertise of diabetes to Parkinson's disease. Novo Nordisk has succeeded in delivering superior returns for a long time thanks to its innovative qualities.
There is more where that came from: The pharmaceutical leader can still post above-average returns and help investors reach the coveted $1 million mark.
