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This is Why AbbVie (ABBV) is a Great Dividend Stock
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
AbbVie in Focus
AbbVie (ABBV - Free Report) is headquartered in North Chicago, and is in the Medical sector. The stock has seen a price change of -12.64% since the start of the year. The drugmaker is currently shelling out a dividend of $1.07 per share, with a dividend yield of 5.31%. This compares to the Large Cap Pharmaceuticals industry's yield of 2.81% and the S&P 500's yield of 1.99%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.28 is up 19.2% from last year. AbbVie has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 18.92%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, AbbVie's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.
ABBV is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $8.66 per share, which represents a year-over-year growth rate of 9.48%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ABBV is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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This is Why AbbVie (ABBV) is a Great Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
AbbVie in Focus
AbbVie (ABBV - Free Report) is headquartered in North Chicago, and is in the Medical sector. The stock has seen a price change of -12.64% since the start of the year. The drugmaker is currently shelling out a dividend of $1.07 per share, with a dividend yield of 5.31%. This compares to the Large Cap Pharmaceuticals industry's yield of 2.81% and the S&P 500's yield of 1.99%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.28 is up 19.2% from last year. AbbVie has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 18.92%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, AbbVie's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.
ABBV is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $8.66 per share, which represents a year-over-year growth rate of 9.48%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ABBV is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).