AbbVie a drug manufacturer with a bigger than 4% dividend yield

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AbbVie a drug manufacturer with a bigger than 4% dividend yield

Published Date: 2018-03-29 | Source: Share Picks USA | Author: Bruce Ingram | Comments

AbbVie a drug manufacturer with a bigger than 4% dividend yield

AbbVie takes a double whammy price hit, could this be the time to buy?

AbbVie is a drug manufacturer that was spun off from Abbot Laboratories in 2013.

Last week the US markets dropped more than 6%. On top of that AbbVie announced the slowing down of trials due to disappointing results, on a drug called Rova-T. The net effect on the share price is a decline from $112 to $92 a drop of about 18%. The dividend yield is now about 4.17%.

I will like to take a closer look at this share to see if it is now time to buy.

What does AbbVie do? To quote from their website

What We Do:

In recent years, the company has maintained a steady double-digit growth. It is forecast to continue growing earnings by 18 to 19% for the next 3 to 4 years.

Last year, dividends grew 12%. The company is forecast to provide an annual Rate Of Return of more than 20% for the next 3 to 4 years.

The current credit rating is a healthy A-. The company's debt is slightly high.

The pharmaceutical industry is hard to break into and AbbVie owns a number of products that still have 5 or more years to run before their patent runs out. AbbVie invests nearly 20% of its revenue in R&D to expand its product offering. The company is planning 20 new product launches by 2020.

There are a number of risks to consider; when the patent runs out on one of its top sellers Humira, an arthritis drug, revenue could fall and regulatory changes are an ongoing risk in this industry.

The share price has continued to drop after the initial announcement about slowing down of trials on Rova-T. The price Initially dropped from $112 on the 21st March down to $95 then continued to slide to $92 on the 27th March. I would consider buying at a price below $90 if there is no more bad news coming out. I would allocate 1% of my portfolio to this purchase. This may not be a buy and hold share. If I do buy it I will keep it for about two years to reap the >4% dividend and the expected annual growth of >18% giving me a total annual ROR of about 23%.

AbbVie's home page can be found here: https://www.abbvie.com



Disclaimer: Please note that I am not a Registered Financial Planner. The articles I write are based on my own personal research and for my own use and is not to be construed as financial planning advice. At all times readers are urged to exercise caution when investing in any financial instruments, to do their own research.


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