AbbVie (ABBV -0.83%) is a drug company, spun off from Abbott Laboratories in 2013, that you might want to consider for your long-term portfolio. One of the biggest green flags for investing in the company is its dividend. AbbVie's recent dividend yield was a solid 3.1% -- the S&P 500's recent yield was a mere 1.2% -- and better still, it has been growing, with plenty of room to keep doing so.
Over the past five years, AbbVie hiked its payout by an average annual rate of 7%. The total annual payout was recently around $6.56 per share, which is up from $5.20 in 2021 and $3.59 in 2018. Clearly, there's been a lot of growth!
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AbbVie's payout ratio -- the percentage of earnings paid out in dividends -- is quite reasonable, too, at less than 50%. That leaves plenty of room for further increases.
Like other pharmaceutical companies, AbbVie has faced the loss of patent protection for various drugs over time, most notably for its blockbuster Humira. But that was never a surprise, and AbbVie has around 90 treatments in its pipeline, having invested nearly $11 billion in research and development in 2024 alone. The majority of those treatments are in the mid to late stages of development.
AbbVie's stock has averaged annual gains of 15.8% over the past decade, and its future is quite promising. But with a forward-looking price-to-earnings (P/E) ratio of 15 at the moment (well above the five-year average near 12), shares aren't a screaming bargain. You might want to wait and hope for a lower price -- or just buy into the stock gradually over time.
