What income investor wants to buy a stock with a dividend that will fall and the business will be disrupted? there is none. However, income investors want dividend stocks that don’t work.
Three Motley Fool contributors think they’ve identified a healthcare stock that fits the bill. That’s why they chose it Abbott Laboratories (NYSE: ABT), Amgen (NASDAQ: AMGN)and AbbVie (NYSE: ABBV).
Dividend King with diversified businesses to buy and hold for years
David Jagielski (Abbott Laboratories): Want the highest dividend stocks you can buy and hold for years? Check out Abbott Laboratories. Not only does the company have a solid track record of paying and increasing dividends, but its broad and diversified business makes it likely that payout increases will continue into the future.
You can write off Abbott as a mediocre income stock because of its low dividend yield of 2%. There are many other high yielding stocks. But the real payoff of owning stocks over the long term. The stock is the Dividend King that has increased its dividend for 52 consecutive years. It has also paid dividends for centuries.
The company doesn’t just have a solid track record. The future holds promise as Abbott has many ways to grow its business. It has pharmaceutical, nutritional, medical device, and diagnostic business units that provide multiple growth opportunities. In the most recent quarter (which ended in June), the company reported positive organic growth, excluding the impact of the COVID-19 test, of more than 9% in all operations. Each segment generated positive organic growth compared to the previous year.
The low payout ratio of 67% suggests that there is still a lot of room ahead for the business to raise dividends, especially when considering the strength and diversity that explains the operation of Abbott Laboratories. This is one of the better dividend stocks that buy-and-hold investors can own right now.
Solid business, solid dividends
Prosper Junior Bakiny (Amgen): What is most important to dividend investors? A high yield is attractive, as a competitive dividend per share. One could cite several other dividend-centric metrics, but the company’s underlying business remains the most important factor to consider. Corporate dividends are only good with businesses that support them.
This is what makes Amgen such an attractive choice. Amgen is a leading biotechnology company with a track record of innovation and a long list of approved products, many of which generate sales of more than $1 billion annually.
Its pipeline looks equally exciting, especially as it can have one of the most promising candidates in the exciting weight loss market; Amgen’s MariTide produced strong results in phase 2 studies. It still has a long way to go before it gets approval, if at all. But there have been some excited analysts. According to market researcher Evaluate Pharma, MariTide could generate sales of up to $2.1 billion by 2030.
Although Amgen’s organic revenue growth has not been impressive over the past three years, candidates like MariTide and others will help move things in the right direction. Amgen’s dividend program remains strong. The company’s payouts have increased by 55% over the past five years. The yield advanced at 2.74%, higher than at S&P 500an average of 1.32%. Thanks to the company’s strong fundamentals, investors can trust Amgen to continue raising its dividend.
Another great member of the A-team dividend
Keith Speights (AbbVie): Little did I know that all three of our choices would begin with the letter “A.” However, I think it’s a good fit because AbbVie deserves to be a dividend A team.
The big drug maker spun off from Abbott in 2013. That’s why AbbVie inherited Abbott’s excellent record of dividend increases and is considered the Dividend King just like its parent company. However, income investors should like AbbVie’s forward dividend yield of nearly 3.2%, even more than the same as Abbott yield.
AbbVie is reasonably priced with a forward earnings multiple of 18.2. The stock price looks more attractive with the company’s growth prospects.
Of course, AbbVie’s revenue and earnings have been declining since its best-selling drug, Humira, lost US patent exclusivity in early 2023. However, a strong rebound should be on the way. Sales are up for AbbVie’s newer autoimmune disease blockbuster drugs, Rinvoq and Skyrizi. The drugmaker also has big growth drivers in antipsychotic drugs Vraylar and migraine therapies Qulipta and Ubrelvy.
AbbVie’s pipeline provides another reason for optimism. The company has more than 90 programs in development. These include promising cancer, immunology, and neurological drugs, some of which are in late-stage testing.
Should you invest $1,000 in AbbVie right now?
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David Jagielski has no position in any of the stocks mentioned. Keith Speights has a position in AbbVie. Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has a position on and recommends Abbott Laboratories. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.
3 Irresistible Dividend Stocks to Buy Now was originally published by The Motley Fool
