Abbott Spin-Off AbbVie Pays Juicy Dividend


Shutterstock photo

New issues are not typically known for paying juicy dividends, butAbbVie ( ABBV ) is an exception.

The former pharmaceuticals arm ofAbbott Laboratories ( ABT ) declared its inaugural dividend last month. AbbVie will pay 40 cents per share on Feb. 15 to shareholders as of Jan. 15.

On an annualized basis, AbbVie pays $1.60 a share, which works out to a yield of 4.4% vs. about 2.5% for the S&P 500. AbbVie has the third highest yield among the 15 dividend-paying stocks in IBD's Medical-Ethical Drugs industry group.

The company was recently added to the S&P 500 Dividend Aristocrats index, which tracks the performance of big-cap stocks that have paid increasing dividends for at least 25 years. Although AbbVie has just declared its first-ever dividend, it was added to the Dividend Aristocrats due to the S&P's treatment of spin-offs.

"We have a solid financial foundation including strong profitability and robust cash flow," said CEO Richard Gonzalez in a conference call on Jan. 30. "We have a commitment to return cash to shareholders including a strong and growing dividend."

CFO William J. Chase noted that growth in the company's dividend is expected to pick up when its pipeline of new drugs comes to market.

North Chicago, Ill.-based AbbVie spun off from Abbott Labs at the start of the year. While the parent company focuses on diagnostic systems, nutritional supplements and medical devices, AbbVie develops drugs for maladies such as hepatitis C, cancer and renal disease.

The firm's bread and butter product is Humira, which is used to treat rheumatoid arthritis, psoriasis and Crohn's disease. Sales of Humira hit nearly $9.3 billion in 2012, or about half of AbbVie's annual revenue. The company sees low double-digit percentage growth in Humira sales in 2013.

The company expects to earn between $3.03 and $3.13 a share in 2013, which is in line with Wall Street's expectations.

AbbVie doesn't have a long trading history and has yet to form its first base. The stock climbed as much as 10% from its $34.92 Jan. 2 opening price. But it has pulled back in recent sessions.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Investing Ideas
More Headlines for: ABBV , ABT

More from Investor's Business Daily


Investor's Business Daily

Investor's Business Daily

Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by