On the 15 August 2018, AbbVie Inc (NYSE:ABBV) will be paying shareholders an upcoming dividend amount of US$0.96 per share. However, investors must have bought the company’s stock before 12 July 2018 in order to qualify for the payment. That means you have only 2 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding AbbVie can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for AbbVie
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
Does AbbVie pass our checks?
The company currently pays out 74.05% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect ABBV’s payout to fall to 45.84% of its earnings, which leads to a dividend yield of 4.51%. However, EPS should increase to $7.11, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view AbbVie as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.Compared to its peers, AbbVie produces a yield of 4.10%, which is high for Biotechs stocks but still below the market’s top dividend payers.
Whilst there are few things you may like about AbbVie from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three fundamental factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for ABBV’s future growth? Take a look at our free research report of analyst consensus for ABBV’s outlook.
- Valuation: What is ABBV worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether ABBV is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.