Here's How Many Shares of AbbVie You'd Need for $5,000 in Yearly Dividends
Key Points
AbbVie is a resilient Dividend King with a wide moat.
It still looks cheap relative to its long-term growth potential.
AbbVie (NYSE: ABBV), which accounts for 6.2% of my portfolio, is one of my favorite long-term dividend stocks. The pharmaceutical giant has raised its dividend annually for 53 consecutive years, making it a Dividend King that has increased its payout for at least 50 years.
I'm sitting on an unrealized gain of nearly 200% on my original position in AbbVie, which I started in early 2020, and I've consistently reinvested my dividends. Its forward yield of 2.4% might seem low compared to the 10-Year Treasury's 5.1% yield. Still, its low forward price-to-earnings ratio of 16 and its massive portfolio of billion-dollar drugs (including the blockbusters Skyrizi and Rinvoq) should limit its downside potential in this choppy market.
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How many shares of AbbVie should you own for $5,000 in annual income?
To earn $5,000 in annual dividends from AbbVie, you would need to own 723 shares for about $206,358 as of this writing. That might not seem like a great deal, especially when the same investment in Pfizer (NYSE: PFE) would generate nearly $12,000 in annual dividends.
But over the past three years, AbbVie's stock rallied 93% as it overcame its loss of U.S. exclusivity for Humira (its blockbuster autoimmune drug) and expanded its new drugs to offset that pressure. Pfizer's stock sank 8% as its sales of COVID-19 vaccines evaporated and its other major drugs faced patent cliffs. Therefore, AbbVie could still be a solid investment for long-term income investors, even though its yield seems unimpressive.
Leo Sun has positions in AbbVie and Pfizer. The Motley Fool has positions in and recommends AbbVie and Pfizer. The Motley Fool has a disclosure policy.