Is AbbVie Stock A Buy In May 2019?

Volatility has returned to the stock market, as a result of escalating trade tensions between the U.S. and certain trading partners such as China. During periods of heightened geopolitical risk, it is a good time for investors to refocus on high-quality dividend growth stocks.

For risk-averse investors looking to reduce portfolio volatility, the Dividend Aristocrats are a great place to seek shelter from the storms. The Dividend Aristocrats are a select group of 57 stocks in the S&P 500 Index, with 25+ years of consecutive dividend increases each year.

They are the ‘best of the best’ dividend growth stocks. The Dividend Aristocrats have a long history of outperforming the market.

The requirements to be a Dividend Aristocrat are:

  • Be in the S&P 500
  • Have 25+ consecutive years of dividend increases
  • Meet certain minimum size & liquidity requirements

There are currently 57 Dividend Aristocrats.

When volatility grips the stock market, investors should seek out quality companies such as AbbVie Inc. (ABBV), which has raised its dividend for over 40 years in a row going back to its days as a subsidiary of Abbott Laboratories (ABT).

AbbVie stock has underperformed the broader market so far this year. Shares of AbbVie have declined ~12% year-to-date, while the S&P 500 Index has gained 13% in 2019 thus far. AbbVie’s significant underperformance likely has investors frustrated, but the long-term direction of the company remains extremely positive.

AbbVie is a highly profitable company, with growth potential and an excellent product portfolio. We believe AbbVie stock is significantly undervalued today. It also pays a hefty dividend yield above 5%, making it one of the most attractive high-yield dividend stocks in our entire database and a buy for May 2019.

Business Overview

AbbVie is a pharmaceutical company focused on Immunology, Oncology, and Virology. AbbVie was spun off by Abbott Laboratories in 2013. Today, AbbVie generates annual revenue in excess of $32 billion and the stock trades with a market capitalization of ~$119 billion. AbbVie has ~30,000 employees. The company treats over 30 million patients in more than 175 countries each year. AbbVie’s products address over 30 conditions across infant, adolescent, adult, and senior stages of life.

The reason for the spin-off was that Abbott wanted AbbVie to have its own dedicated management team and ability to focus entirely on its own strategic initiatives. Abbott is a diversified conglomerate of pharmaceutical, medical devices, and consumer health care products, while AbbVie is a pharmaceutical pure-play.

The decision has certainly paid off for investors, as AbbVie has generated massive growth since it became an independent company.

ABBV Performance

Source: Earnings Presentation

AbbVie’s most important product by far is Humira, which by itself represents ~60% of the company’s annual revenue. Humira is a multi-purpose pharmaceutical product, and is the top-selling drug in the world. While this was once a huge advantage, as Humira fueled AbbVie’s amazing growth in recent years, it is risky for a pharmaceutical company to be too dependent on one individual product.

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Disclaimer: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of Sure ...

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