Regardless of the ultimate timing, branded drugs cannot maintain their high profit margins forever. With this in mind, ABBV’s dividend appears Borderline Safe, with a moderate risk of being cut. Some of its other major drugs are Imbruvica, which treats leukemia, and Viekira, which treats hepatitis C. The company reported nearly $23 billion in sales last year and sells its drugs in over 170 countries. Dividend Safety Score Our Safety Score answers the question, “Is the current dividend payment safe?” Also, some of my stock have no dividend scoring available anymore. A grade indicates an extremely low probability of a dividend cut. Great review. My pleasure! You're reading an article by Simply Safe Dividends, the makers of online portfolio tools for dividend investors. This is a key point of controversy surrounding the stock. ABBV’s stock trades at 11.1x forward earnings estimates and has a dividend yield of 4.1%. We will re-evaluate AbbVie’s dividend growth potential as that time draws nearer. After issuing shares to help finance the cash-and-stock deal, AbbVie's annual dividend commitment, using its current payout of $4.28 per share, will rise to about $7.5 billion. Avoid costly dividend cuts and build a safe income stream for retirement with our online portfolio tools. Both AbbVie and Allergan had seen their stock prices languish in recent years as investors worried about each firm's future growth potential. A score of 50 is average, 75 or higher is excellent, and 25 or lower is weak. Best of luck with your decision, and thanks for commenting! Dividend Safety Grade: C. A grade indicates an extremely low probability of a dividend cut. AbbVie (ABBV) is one of the more controversial dividend aristocrats for several reasons. Boost Your Portfolio: Start a Free Trial! Major pharma players invest billions of dollars and years of time in research and development to commercialize breakthrough drugs. The good news is the new AbbVie's dividend will remain comfortably covered by the firm's free cash flow. It’s very hard for a complete outsider to forecast the timing and profitability of a company’s drug pipeline, so finding businesses with enough diversification helps reduce this risk. The company received a Dividend Safety Score of 78, which is excellent and places it in the top quartile of dividend-paying stocks. The company last increased its dividend by 12% in October 2015 and is included on the dividend aristocrats list despite being spun off at the start of 2013, when it continued its dividend growth streak as an independent business. mounting political pressure to lower drug prices, our May 2019 note reviewing AbbVie's underperformance, Try Simply Safe Dividends FREE for 14 days. The company has a healthy payout ratio, generates plenty of free cash flow, and is enjoying double-digit earnings growth. For a stock with above-average growth prospects over the next few years, it appears to be very reasonably priced. AbbVie's Dividend Safety Score Downgraded to Borderline Safe Following Large Deal to Buy Allergan. Pfizer's COVID-19 Vaccine Shows Promise; Spin-off to Execute November 13 With Dividend Adjustment Next Quarter. The company pays a juicy 5.9% dividend. ABBV’s long-term dividend and fundamental data charts can all be seen by clicking here. Scores of 50 are average, 75 or higher is very good, and 25 or lower is considered weak. In AbbVie’s case, over half of its business is concentrated in one product. AbbVie’s Dividend Growth score of 89 is excellent. A score of 50 is average, 75 or higher is excellent, and 25 or lower is weak. Like all pharmaceutical companies, ABBV is faced with competition … C grade indicates a low probability for a dividend cut and/or average safety risk. We analyzed all of Berkshire's dividend stocks inside. A low score does not mean there will be a dividend cut but it gives me a warning signal to suggest that ABBV dividend safety could be at risk. As a relatively new spin-off (2013), the company has a much shorter dividend growth track record than traditional aristocrats. Given AbbVie’s strong outlook over the next few years for continued growth, we think its payout ratio is very healthy for the time being. ABBV's dividend yield, history, payout ratio, proprietary DARS™ rating & much more! AbbVie Dividend Safety Score. See data and research on the full dividend aristocrats list. AbbVie (NYSE: ABBV) gets a lot of attention these days, and most of it is not positive.. B grade indicates a very low probability for a dividend cut. This dividend growth rate is below the 10.6% used in this analysis, thus providing a large margin of safety. Which category does AbbVie fall … With that said, AbbVie has increased its dividend by 42% since 2013 with increases each year. Our Safety Score answers the question, “Is the current dividend payment safe?” We look at factors such as current and historical EPS and FCF payout ratios, debt levels, free cash flow generation, industry cyclicality, ROIC trends, and more. AbbVie was spun off by Abbott Laboratories in 2013. Our Safety Score answers the question, “Is the current dividend … With this in mind, ABBV’s dividend appears Borderline Safe with a moderate risk of being cut. A stock’s Dividend Safety Score represents its safety rank relative to all of the other dividend-paying stocks in the market. Contact Us, COPYRIGHT © 2017 Simply Safe Dividends LLC, AbbVie (ABBV): A Cheap Dividend Aristocrat Yielding Over 4%. The company’s success will hinge on the success of its drug pipeline and its ability to protect cash flows from Humira for as long as possible from biosimilar competitors. If successful, AbbVie believes it can maintain strong profitability in the U.S. through 2022, but there is plenty of skepticism surrounding the matter. If Humira’s revenue unexpectedly shrinks over the next five years, the balance sheet could become strained. By comparing companies’ Dividend Scores, you can easier select quality dividend stocks and improve your chances of generating dividend income and preserving capital in the long run. You just never know what might crop up any given week as it relates to new competition, unexpected developments in the drug pipeline, litigation, or other issues with existing treatments. June 26, 2019. Thanks for this great analysis of ABBV. The key issue is how long the company’s Humira drug can profit in the U.S. before biosimilar competition emerges. We don’t have data that goes back to the last recession, but pharma companies are generally recession-resistant because consumers still need to treat their illnesses regardless of how the economy is doing. Some investors have expressed concern about AbbVie’s balance sheet. A score of 50 is average, 75 or higher is excellent, and 25 or lower is weak. Unfortunately, we don’t have an edge when it comes to analyzing this risk, nor do we have a comfortable method of evaluating AbbVie’s large pipeline of new drugs that will launch over the next five years. Sales of Humira accounted for over 60% of sales last year and are expected to represent nearly 50% of revenue by 2020 as well. AbbVie also expects to launch over 20 new products by 2020 to reach to its goals and believes that its current pipeline has potential to achieve revenues of nearly $30 billion by 2024. The difference of just a few years could really make or break the stock’s performance over the coming years. 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