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AbbVie: A Pick For Dividend Investors With A 4.2% Yield

Jan. 03, 2022 5:27 AM ETAbbVie Inc. (ABBV) Stock17 Comments
Daniel Schönberger profile picture
Daniel Schönberger


  • AbbVie once again reported strong quarterly results with revenue growing in the double digits.
  • But analysts are rather pessimistic that AbbVie will not be able to grow with a similar pace as in the last few years.
  • And AbbVie is facing several issues like its balance sheet and the huge discrepancies between net income and free cash flow.
  • Nevertheless, AbbVie still seems to be fairly valued if we assume growth in the low-to-mid single digits.


vzphotos/iStock Editorial via Getty Images

In the recent past, I have written a few articles about companies and stocks with a high dividend yield. This includes stocks like AT&T (T) as well as Altria (MO

This article was written by

Daniel Schönberger profile picture
My analysis is focused on high-quality companies, that can outperform the market over the long-run due to a competitive advantage (economic moat) and high levels of defensibility. Focused on European and North American companies, but without constraints regarding market capitalization (from large cap to small cap companies).My academic background is in sociology and I hold a Master’s Degree in Sociology (with main emphasis on organizational and economic sociology) and a Bachelor’s Degree in Sociology and History.I also write about wide economic moats in my Substack: https://stockmarket101.substack.comI also write about investing, economy and similar topics on Medium: https://medium.com/@danielschonberger

Analyst’s Disclosure: I/we have a beneficial long position in the shares of GILD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (17)

I don't see stellar performance ahead, but not every stock needs to be a superstar. Good performance will be good enough for this part of my portfolio.
Anyone brave enough to venture some thoughts on this?

I have the equivalent almost 11 years of dividend payments in the capital gain I am sitting on with ABBV (purchased shares in Mar, 2020, avg cost $74.4 so yield on cost of 7.57%). My investment goal is to create passive income stream. (I did the same with PRU, by the way) and am torn between liquidating and repositioning the funds in order to double that passive income or keeping it as is. I am not accounting for lost opportunity cost by holding instead, which would be the dividend rate plus any additional capital gains I could realize in the future if price rises more. Also there is some value in keeping as-is since this would continue to be a core position I don't have to worry too much about, so the risk of managing the funds is gone if I hold. Thoughts? Do 50/50? Is ABBV fairly priced for the present? It would help greatly if anyone could post the exact date of the upcoming market crash.
zito profile picture
@excenter Certainly some risk of a pullback after such a big run. My advice and my current practice on ABBV is covered calls. If you sell Feb'22 $130's for $7 you can cover a lot of downside. Just be careful not to get called away just before the ex-div date.
@excenter I will let you know the date shortly after it happens.
same to you
TaiPan profile picture
I don’t buy based on an assessment of fair value. Such assessments are like entering a swamp at night without a flashlight, hoping you make the right assumptions about where to step. Ask 20 analysts for their estimation of fair value and you’ll get 20 different prices. What I prefer to do is make sure the company is in solid shape, which the author has shown ABBV to be (with some reservations), take its current dividend yield, and its most recent dividend increase, then project a yield on cost in a given period.

My goal is a yield on cost of 10% in ten years. If ABBV continues to raise its dividend at ~8% per year, which is its current dividend growth rate, a purchase today would likely provide a yield on cost of about 9.44% in ten years. Close enough. So, as long as you have confidence in ABBV, it’s still a good buy. But don’t wait too long in case the share price keeps rising.

True, there are questions about ABBV’s longer-term growth, but these have been around for ages it seems. My risk control is to keep a stop limit loss order active.
The author obviously overlooked editing GILD to ABBV in final paragraph
Thanks for interesting read. Why be ‘unease’ with the delta between earnings and FCF, assuming we are in fact familiar with the cause (i.e. notably amortisation of acquired intangibles, for which cash outflow materialized in the past when doing the relevant deal)?
@silent_bert I couldn’t agree more, it’s laid out very clearly in filings and it’s good for shareholders as it’s for tax avoidance.

Additionally, I didn’t like the comment on needing to replace 20B in Humira. Humira isn’t going to zero. Consensus seems to be 40-50% decrease in 2023.
Abbvie and Abbott are both long term investments that should be held.
Bill West profile picture
Basically made ABBV a core holding in my IRA and will be taking the dividends it throws off to fund retirement living while keeping core investment growing.

Dividend King.......!!
Up 26%, last year, ABBV, is a shareholder friendly company. Wait for a dip before adding.
pauliedeuce profile picture
@Money 29 was adding below 112 before it ran the end of last year. Wish I bought more
Thank you for the very insightful article. This highlights the classic arguments between GAAP and "Adjusted GAAP."
Collecting long ABBV.
Interesting article. Knowing ABBV dropped to the low 60's twice in the last five years, I think I'll collect the div and sit and wait to invest further in ABBV. I do like this company.
Based on your hypothesis, it seems like selling some covered calls might be prudent this year. Happy new year to all avid SA investors. KNG
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