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Good Dividend Potential for AbbVie in a Tough Landscape

The narrow-moat firm is undervalued and well-positioned with its dividend.


Damien Conover: Today we're talking about AbbVie. AbbVie is a stock that we think is both undervalued and well positioned with its dividend. Right now, the dividend yield is close to 5%, and in a landscape where it's difficult to get yield, we think AbbVie's yield is both secure and has potential for some modest growth over the next few years. 

When we think about AbbVie, it's a stock that is trading from a price/earnings basis on a very low metric. It's close to 10 times earnings. And we think it's very secure with its earnings growth over the next three years. But the main reason why it's trading so low is it does have a massive patent loss coming up. In 2024 we think the Humira patent loss will put a lot of pressure on earnings, but from a dividend perspective, we still think AbbVie will be able to support its dividend in the 2024 time period.

Damien Conover does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.