AbbVie (ABBV) has announced it 2018 dividend increase 0f 7 cents per share, bringing the quarterly dividend to $0.74 per share from 2017’s $0.64.  This represents a 10.94% YOY increase to the dividend and marks the 5th straight year of dividend increases from the company, since being spun off from ABT in 2013, and 6 years of uninterrupted dividend payments.

With the new quarterly dividend, the yield on ABBV sits at 2.91% based on the 12/15 closing price of $97.45.  The announced increase, beats my expectation by 2 cents or $0.69 per share.

Lets take a look at the complete history of ABBV’s dividend:

As we can see from the chart, ABBV has a 5 year streak of increasing its dividend, but actually has one year with 2 increases.  The average increase to the short dividend history comes in at and inflation crushing 12.28%.  In the 6 years, the dividend has almost doubled already.

ABBV vs S&P500

A good dividend is nice to receive, but capital appreciation is also important.  Let’s compare the performance of ABBV (since inception) to the S&P500.

Looking from late 2012 (when ABBV was spun off) we see that ABBV has handily outperformed the S&P500. Most of that outperformance has occurred in 2017 with excitement over the pipeline from ABBV moving into late stages of FDA approval.

ABBV Stats

Market Cap: $155.57 Billion

Beta: 1.42

PE Ratio: 23.67

Dividend Yield: 2.91%

Payout Ratio: 60.44%

Profit Margin: 24.38%

Total Cash: $9.55 billion

Total Debt: $38.09 billion

I’ve recently written about Merck (MRK) announcing their dividend increase and also said ABBV looks more attractive as a holding compared to MRK.  Looking at the financials, ABBV trades at a lower multiple, has a better drug pipeline, better margins, a safer dividend, and more room for dividend growth.  But you compare your own figures.  The risk in ABBV would be with the excitement surrounding its late stage drugs, if some of those drugs do not get final approval, there could be a volatile ride.  However, that is the risk trade off involved.  With a pretty deep pipeline, even with a few rejections, all it takes is that one approval to have a new hit on it’s hands and drive the price further.

For shareholders looking for the combined history of ABT and ABBV post spinoff, stay tuned.

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