Well Rounded Investor

My journey of becoming financial independence by 35 years old

Recent Buy – ABBV

Ok, I’ve stated before that I don’t want to mess with the pharmaceutical companies, ABBV is one of them. I don’t have anything against this company or its drugs. I’m buying it for dividend yield. It is yielding At 4.6%, compare to BAC of 2.3% YOC. I’d like to boost my dividend payout overall. 

Let’s face it, Hillary is going to win today, and she’s promised to look into drug pricing, health insurance, California is voting to make sure the state Medicaid program will have the same drug pricing  as the VA. I don’t know about you, but I think this is HUGE. Like marijuana legalization beginning in California with medical use, now recreational use is for half of the country. It boils down to revenues – MONEY. Yes, this will lead to other fiscal responsibility State to follow suit. 

That means, bad news for pharmaceutical companies. While I think I’m a little early in buying pharmaceutical companies, but the yield of 4.6% by ABBV is a good start. I’m still sitting on a bunch of cash just in case for tomorrow surprise. 

About AbbVie

AbbVie Inc. (NYSE:ABBV) is a world-wide, research-based biopharmaceutical company that develops and markets products to treat conditions such as chronic autoimmune diseases, including rheumatoid arthritis, psoriasis and Crohn’s disease; hepatitis C; human immunodeficiency virus (HIV); endometriosis; thyroid disease; Parkinson’s disease; complications associated with chronic kidney disease and cystic fibrosis, and other health conditions. ABBV was incorporated in 2012 and is based in North Chicago, Illinois.

ABBV spun off from Abbott Laboratories (NYSE:ABT) in January 2013, so the company does not yet have a long track record of paying and raising dividends. The company has top-notch financials, with a double-digit growth rate for each of the last 3 years. I expect some dividend growth from ABBV in the next few years, but not a lot as the company might be bracing for the storm ahead. 

Why Buy?

1. Return value to shareholders in the form of share buybacks and dividend payments. Recently, the company’s share repurchase authorization was increased by $5 billion to $10 billion. 

  • I must be cautious as when revenue and profit stall, companies will buy back share to make the top and bottom number look good. That’s why I initiate 10 shares only. 

2. ABBV hiked its quarterly dividend by 12% for 2016. Since inception, the company’s dividend has increased by more than 42%. 

  • As stated earlier, the dividend yields is already high at 4.6%, I don’t expect the teen growth rate as management might be bracing for Hillary Hurricaine. 

3. ABBV supports its strong dividend yield with strong cash flows that are very secure over the next few years. Sales of Humira, one of the best immunology drugs for rheumatoid arthritis, Crohn’s disease, and psoriasis, increased nearly 12% to $14 billion in 2015. 

  • I also expect the company will do some buying of new or high revenues drug to boost growth. The company is working hard on improving its pipeline, through acquistions, collaborations and, of course, research and development. 

2 comments on “Recent Buy – ABBV

  1. Investment Hunting
    November 11, 2016

    She didn’t win, but you did. All the bio stocks are heading way up. I bought 100 shares of ABBV a few weeks ago. Happy to be a shareholder with you.

    Liked by 1 person

    • Vivianne
      November 11, 2016

      Yeah, I saw your option, and I thought that’s so cool you can win on both end of the stick.


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