It isn't easy to find a pharmaceutical company that has a strong product lineup and a robust pipeline, but also cranks out a generous dividend every quarter. I've been an AbbVie (ABBV 3.75%) bull for years, and especially these days, I think it's a bargain stock that can produce outsized returns for a long time to come. Here's why.
A blockbuster developer
Some pharmaceutical companies dream of developing and launching one blockbuster drug that will sustain it. Going by full-year 2024 sales, AbbVie had no fewer than 12 of them, a lineup that includes its top seller Skyrizi and the well-known Botox. Collectively, that dozen brought in net revenue of nearly $47 billion.
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Patients across various therapeutic areas are constantly being prescribed medicines made by AbbVie. In the company's most recently reported quarter, net revenue rose by nearly 7% year over year (to $15.4 billion). That's an impressive rate given the company's size and longevity. Non-GAAP (adjusted) net income per share rose more meaningfully, advancing by 12% to $2.97.
AbbVie's profit can swing around some -- this isn't unusual, given that large pharmaceutical companies are always staring down from patent cliffs, and development pipelines are expensive. But it consistently manages to make a buck and throw off plenty of cash while doing it. Over the past five years, its free cash flow has ranged from almost $16.8 billion to $24.2 billion.
Pharmaceutical royalty
That's a lot of scratch, and AbbVie is always willing to share some of it in the form of shareholder dividends. In fact, the company is a Dividend King, having raised its dividend for at least 50 consecutive years, and a well-paying one at that. Its quarterly payout currently stands at $1.64 per share, which yields just under 3% -- well above the 1.2% average of all component stocks of the S&P 500 index.
In any industry, the combination of a solid product lineup and a high payout is irresistible. In pharmaceuticals, it's very rare. AbbVie is a special stock, and to me it's undoubtedly a buy candidate.
