Dividend aristocrats are S&P 500 companies that have raised their dividends for 25+ years. I have been considering whether I should sell my holdings in ABBV and this article has given me a lot to consider. With that said, AbbVie has increased its dividend by 42% since 2013 with increases each year. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories. Safe Dividend Stocks to Buy for Retirement: AbbVie (ABBV) Dividend Safety Score: 83 Dividend Yield: 3.8% Dividend Growth Streak: 4 years. If Humira’s revenue unexpectedly shrinks over the next five years, the balance sheet could become strained. Scores of 50 are average, 75 or higher is very good, and 25 or lower is considered weak. ABBV has a risk rating of 1.75 which classifies it as a Medium risk stock. Dividend.com: The #1 Source For Dividend Investing. While this can work for some companies that have powerful brands (e.g. The bigger challenge, however, is AbbVie’s profit drivers. Last September, JPMorgan Chase, which yields 3.1%, boosted its quarterly dividend to 80 cents a share from 56 cents. AbbVie’s management team expects the company to reach $37 billion in sales by 2020, which would represent more than a 60% increase from 2015’s revenue level. Learn more about Dividend Safety Scores here. It’s very hard for a complete outsider to forecast the timing and profitability of a company’s drug pipeline, so finding businesses with enough diversification helps reduce this risk. Which category does AbbVie fall … Of this total, roughly half of total sales would come from the company’s arthritis drug Humira, and another 13.5% would come from sales of leukemia drug Imbruvica. Dividend Risk Score: C Retirement Suitability Score: B Last Dividend Increase: 10.3% Overview & Current Events AbbVie is a biotechnology company focused on developing and commercializing drugs for immunology, oncology and virology. AbbVie Inc (NYSE: ABBV) is a research-driven biopharmaceutical company that was spun off from Abbott Laboratories (NYSE: ABT) in 2013. Still several years away it seems. We don’t have data that goes back to the last recession, but pharma companies are generally recession-resistant because consumers still need to treat their illnesses regardless of how the economy is doing. Glad you found the article useful. AbbVie needs to develop new drugs that can eventually replace those sales or else it could see a steep revenue decline that could endanger the dividend. Great review. For the time being, AbbVie’s dividend payment is extremely safe. We believe AbbVie will continue recording at least a high-single dividend growth rate for the next few years. Pfizer announced on Monday its COVID-19 vaccine candidate was found to be more than 90% effective, and no serious safety concerns had... Dominion's Lower Dividend and New Business Mix Improve Safety Profile; We Plan to Hold Our Shares. Our Safety Score answers the question, “Is the current dividend … By comparing companies’ Dividend Scores, you can easier select quality dividend stocks and improve your chances of generating dividend income and preserving capital in the long run. Unfortunately, we don’t have an edge when it comes to analyzing this risk, nor do we have a comfortable method of evaluating AbbVie’s large pipeline of new drugs that will launch over the next five years. Thanks, Jim. AbbVie Dividend Safety Score. The good news is the new AbbVie's dividend will remain comfortably covered by the firm's free cash flow. In addition to its healthy payout ratio, AbbVie has generated sales growth in each of the last five years. Abbott Laboratories, which spun off AbbVie, has a dividend growth streak of more than 40 consecutive years and is the reason why AbbVie is considered a dividend aristocrat. There are certainly more factors to consider with ABBV than most of the other dividend aristocrats. Terms of Service | This dividend growth rate is below the 10.6% used in this analysis, thus providing a large margin of safety. The company has a healthy payout ratio, generates plenty of free cash flow, and is enjoying double-digit earnings growth. Dominion made its dividend cut official this week, reducing its fourth-quarter payout by 33% after closing a deal to sell its natural... AltaGas's Falling Leverage Supports Dividend But Firm Will Evaluate Splitting Off Midstream Business. Pfizer’s COVID-19 Vaccine Shows Promise; Spin-off to Execute November 13 With Dividend Adjustment Next Quarter, Dominion’s Lower Dividend and New Business Mix Improve Safety Profile; We Plan to Hold Our Shares, AltaGas’s Falling Leverage Supports Dividend But Firm Will Evaluate Splitting Off Midstream Business, Altria’s Tobacco Business Remains Resilient But Longer-term Growth Uncertainties Linger, some analysts see competition emerging in 2019. The company received a Dividend Safety Score of 78, which is excellent and places it in the top quartile of dividend-paying stocks. AbbVie’s free cash flow payout ratio over the last 12 months is a healthy 49%, which is roughly in line with the company’s payout ratios realized since it was spun off in 2013. The bigger risk to sales cyclicality is patent expirations of major drugs such as Humira. The main wild card impacting future dividend growth beyond the next few years is the rise of Humira competition, which could come as early as 2019 or as late as 2022. ABBV's dividend yield, history, payout ratio, proprietary DARS™ rating & much more! In AbbVie’s case, over half of its business is concentrated in one product. As growth continues, operating margins are expected to expand by 100-200 basis points per year to drive double-digit earnings growth. Most dividend aristocrats possess the characters we desire when searching for safe dividend stocks. AbbVie was spun off by Abbott Laboratories in 2013. June 26, 2019. A score of 50 is average, 75 or higher is excellent, and 25 or lower is weak. C grade indicates a low probability for a dividend cut and/or average safety risk. Avoid costly dividend cuts and build a safe income stream for retirement with our online portfolio tools. AbbVie (ABBV) is one of the more controversial dividend aristocrats for several reasons. Both AbbVie and Allergan had seen their stock prices languish in recent years as investors worried about each firm's future growth potential. As seen below, AbbVie’s primary markets combine to reach nearly $200 billion in size, providing the company with many different opportunities for growth. AbbVie’s free cash flow payout ratio over the last 12 months is a healthy 49%, which is roughly in line with the company’s payout ratios realized since it was spun off in 2013. High dividend payments are great, and rising dividend payments are better, but dividend cuts are the worst.. Not only are your dividend payments reduced, but also stock values fall well ahead of the dividend cut, and often fall even further immediately following the announcement. Approximately 61% of the company’s revenue comes from sales of Humira, a drug that treats arthritis. AbbVie Dividend Safety Score. Johnson & Johnson is a great example. Some investors have expressed concern about AbbVie’s balance sheet. Interpreting Dividend Safety Scores Dividend Safety Scores range from 0 to 100. Have an order in to buy but have to admit that I have future concerns about Humira. At first glance, the company’s $31.7 billion debt burden, largely resulting from AbbVie’s $21 billion acquisition of Pharmacyclics in 2015, does raise some eyebrows. C grade indicates a low probability for a dividend cut and/or average safety risk. We analyze 25+ years of dividend data and 10+ years of fundamental data to understand the safety and growth prospects of a dividend. These patents covers area such as manufacturing and formulation and do not begin to expire until 2022. Growth will be fueled by the company’s reasonable free cash flow payout ratio of 49% and strong business fundamentals as drug sales and margins are expected to increase significantly through 2020. Simply Safe Dividends (SSD) awards a safety score of 50 out of 100 points, a grade that it calls “borderline safe.” SSD lowered ABBV’s safety score in 2019 from 61 (“safe”) to 50 (“borderline safe”) upon the announcement of AbbVie’s intent to acquire Allergan in an $80 billion deal. AbbVie's Dividend Safety Score Downgraded to Borderline Safe Following Large Deal to Buy Allergan. For these reasons, we generally prefer to invest elsewhere in the market. AbbVie (ABBV) announced plans to acquire Allergan (ANG) in a deal valued at more than $80 billion, including assumed debt. Dividend Safety Grade: B. mounting political pressure to lower drug prices, our May 2019 note reviewing AbbVie's underperformance, Try Simply Safe Dividends FREE for 14 days. Try Simply Safe Dividends FREE for 14 days. AbbVie (NYSE: ABBV) gets a lot of attention these days, and most of it is not positive..