AbbVie Has Raised Its Dividend for 53 Straight Years and Still Looks Attractively Valued. Is This Dividend King the Smartest Buy in Healthcare Right Now?
Key Points
AbbVie successfully transitioned away from Humira over the past three years.
It still looks cheap relative to its long-term growth potential.
It has plenty of room to raise its dividend.
AbbVie (NYSE: ABBV), one of the world's largest pharmaceutical companies, is usually considered a blue chip dividend stock rather than a higher-growth one. Yet over the past five years, its stock has rallied 125% and delivered a total return of 170% with reinvested dividends.
AbbVie has raised its dividend for 53 consecutive years (including its history as part of Abbott Laboratories (NYSE: ABT) up to 2013), putting it in the elite club of Dividend Kings that have boosted their payouts each year for at least half a century. It also still looks like a bargain at 18 times forward earnings. So is AbbVie one of the best healthcare stocks to buy right now?
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What happened to AbbVie over the past few years?
Back in 2018, AbbVie's blockbuster autoimmune drug, Humira, accounted for 61% of its top line. To diversify its top line away from Humira, which was set to lose its U.S. patent exclusivity in 2023, it launched two immunology drugs, Skyrizi and Rinvoq, in 2019. It also acquired Allergan -- the developer of Botox -- in a $63 billion cash-and-stock deal in 2020.
Many investors still dreaded Humira's loss of patent exclusivity. But from 2021 to 2025, AbbVie's revenue still rose from $56.1 billion to $61.2 billion as stronger sales of Skyrizi and Rinvoq, the integration of Allergan's business, and new acquisitions offset that pressure.
Its adjusted EPS still dipped from $11.85 to $10.00 as biosimilars squeezed Humira's margins, it recognized some big upfront charges from its acquisitions of ImmunoGen and Cerevel Therapeutics, and it ramped up its R&D investments to develop new drugs.
However, AbbVie proved the bears wrong by growing its top line and staying firmly profitable even after Humira faced more biosimilar competitors. Its annual free cash flow (FCF) dropped from $22.0 billion in 2021 to $17.8 billion in 2025, but it still easily covered its annual dividends -- which rose from $9.3 billion in 2021 to $11.7 billion in 2025.
What will happen to AbbVie over the next few years?
From 2025 to 2028, analysts expect AbbVie's revenue and adjusted EPS to grow at CAGRs of 9% and 21%, respectively. That growth should be driven by the stabilization of Humira's year-over-year growth, soaring sales of Skyrizi and Rinvoq, and the growing importance of ImmunoGen's antibody-drug conjugates (ADCs) and Cerevel's neuroscience assets.
Skyrizi and Rinvoq are already approved for inflammatory bowel disease, plaque psoriasis, and other dermatological conditions, and will likely be approved for additional uses over the next few years. AbbVie expects those two drugs to generate over $31 billion in combined sales by 2027 (which would be equivalent to 43% of its projected revenue for that year).
Both of those drugs will remain under patent protection well into the 2030s, giving AbbVie plenty of cash and time to develop and acquire more blockbuster drugs. It will also continue to expand its oncology and neuroscience portfolio to reduce its dependence on the immunology market.
Is it the right time to buy AbbVie?
AbbVie pays a forward yield of 2.7%, which might not seem impressive compared to the 10-year Treasury's 4.6% yield or Pfizer's (NYSE: PFE) 7% yield. However, AbbVie has also easily outperformed Pfizer -- which lost more than 40% of its value over the past five years as it struggled with plummeting COVID-19 vaccine sales and upcoming patent expirations. AbbVie can also easily afford to continue raising its dividends for the foreseeable future.
AbbVie might not be an exciting investment, but it's a reliable dividend play for long-term investors. That's why I hold AbbVie as one of my top holdings (5.9% of my portfolio), and why I wouldn't hesitate to add more shares even as it hovers near its all-time high.
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Leo Sun has positions in AbbVie and Pfizer. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Pfizer. The Motley Fool has a disclosure policy.
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