Three Motley Fool authors are thinking about dividends in Q2 2024. They think they've found April's no-brainer dividend picks. They like AbbVie, Gilead Sciences, and Pfizer for these reasons. Keith Speights (AbbVie)'s dividend is one of the most attractive. What beats high dividends? High dividend yield and rising dividend. AbbVie provides that.
The biopharmaceutical company's dividend yield is about 3.6%. Strong yields are typical for AbbVie. The yield has typically exceeded 3%. Few firms can match AbbVie's dividend growth. Since leaving Abbott Labs in 2013, AbbVie has increased its dividend payout by 288%. Dividend King, the large drugmaker has raised dividends for 52 years (42 of them as Abbott).
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Can AbbVie maintain dividend growth? I guess so. The corporation anticipates $18 billion in free cash flow this year. Dividends were $10.5 billion in 2023. With Humira's loss of U.S. exclusivity, AbbVie's revenue and profits have fallen. However, the company expects sales growth next year "with a high single-digit CAGR [compound annual growth rate] through the end of the decade."
I support that optimism. Rinvoq and Skyrizi should surpass Humira's peak annual sales. Other growing stars at AbbVie are migraine medications Ubrelvy and Qulipta. The ImmunoGen and Cerevel Therapeutics acquisitions could boost growth.
Income investors should consider Gilead's strong yield and dependability. Gilead Sciences' David Jagielski: Gilead Sciences is a top healthcare stock investors can safely buy this month. The drugmaker's strong HIV treatment business positions it to produce consistent results given the continued need for therapy. The company's revenue has averaged $27 billion for three years. Profits have averaged 16% of sales, despite some volatility.
Income investors should expect Gilead stability and consistency. This low-volatility stock won't fluctuate like the market. That implies your stock returns may not be outstanding, but dividend investors can benefit from that stability. Gilead is growing despite its stability. It expanded its oncology business 37% last year.
The stock pays a 4.2% dividend yield, three times the S&P 500 average of 1.4%. Gilead has increased rewards recently. Five years ago, the company paid $0.63 per share quarterly dividends. It's up 22% since then. A strong dividend yield, sustainable payout ratio of less than 70%, and trading at 10 times analyst-estimated future profits characterize the company. The stock ticks several dividend investor boxes and is a good long-term buy.
Fairly priced dividend stock Pfizer Prosper Junior Bakiny: Can anything else go wrong for Pfizer? As COVID-19 sales fell last year, the company's shares, revenue, and earnings fell. The drugmaker isn't improving this year. Recent regulatory success on various medication prospects hasn't helped the stock. By far, Pfizer led the industry with seven new approvals last year. Not another drugmaker had more than three.
A refreshed portfolio will help Pfizer overcome its COVID-19 slump. It takes time, but stock market patience pays off. Pfizer keeps innovating. Its pipeline includes 112 candidates, 31 of whom are in late-stage trials. Drugmakers often experience sales declines. Pfizer's recent slump may be for the best. Not merely by its norms, it had record revenue in 2021 and 2022.
The first biopharmaceutical business to reach $100 billion in sales was Pfizer in 2022. The corporation may not return there soon, but sales should continue above pre-COVID-19 levels. Pfizer has grown its dividends by 61.5% in the past decade and pays 6.1%.
Finally, Pfizer's projected price-to-earnings ratio of 12.3 is reasonable compared to the pharmaceutical industry's 18.1. As a dividend stock, the drugmaker makes sense for long-term investors.
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