This Growth Stock Pays a Strong Dividend

You could forgive CEO Rick Gonzalez if he feels like gloating these days.

Back in June 2019, he announced that his biopharmaceutical firm was paying $63 billion to buy an Irish drug firm.

Gonzalez patiently explained to investors that the huge transaction would have a profound impact on his firm’s growth story.

Wall Street strongly disagreed, and Gonzalez watched as the stock sank 15% in a single session, erasing almost $20 billion in market value.

No doubt some of that selloff stemmed from fears that the deal would jeopardize the juicy dividend this firm had been paying for years.

Well, as the saying goes, look who’s laughing now – because the transaction was nothing short of transformative.

Fact is, the stock boasts a very nice yield of 4% and has beat the broad market by some 49%.

As the biotech sector heats up, let me show you a strong dividend-paying stock like this one is a great way to play today’s market…

You Don’t Have to Sacrifice Growth for Dividends with This Biotech Stock

I’m not the only one who thinks dividends are a good way to play the market at a time of historic inflation.

Consider that according to a recent story in the Wall Street Journal, winter stock market blues sent the S&P 500 High-Yield Dividend Index, which consists of the 80 highest dividend-payers in the S&P 500, up 2.6% for the year.

The S&P 500 as a whole, meanwhile, was down 5.8% at the time.

In fact, according to the Journal, the average S&P 500 stock that paid dividends was up 6.6% more than non-dividend payers in the index. That’s the largest discrepancy in favor of dividend payers in 17 years.

Now, I don’t advise using the dividend yield as the main reason to buy tech stocks. You can’t just shop for dividend yield alone. Especially not in this climate.

A single quarterly loss can hammer a stock and undermine your total return. A cut in the dividend could crush the stock.

But that doesn’t mean you should completely ignore a tech investment just because they pay a dividend.

You want to find leaders like Gonzalez who are committed to excellent growth and strong dividends.

It’s a good thing, then, that he’s the CEO of AbbVie Inc. (ABBV), the Illinois-based biotech company that developed Humira – the $19 billion per year arthritis drug that is the best-selling medicine in the world.

AbbVie dates back to 2013 when it was spun off from storied medical company Abbott Laboratories (ABT). Abbott kept the medical device, nutrition, and diagnostics equipment businesses, while the new AbbVie became an independent biotech research company.

At the time of the split, Gonzalez was already a veteran of the firm, having worked for Abbott for 30 years, including as President and Chief Operating Officer, and even briefly having retired.

He was then chosen to be the new AbbVie’s Chairman and CEO, and he’s had a very successful run. One part of his success, and popularity with shareholders, is no doubt his firm’s long history of paying and growing its dividends.

Right now, with a dividend yield of about 4.8%, AbbVie boasts 3.5-times the average yield of the S&P 500. And it’s increased its dividend payment every year since it was spun off in 2013, growing it from $1.60 per share in 2013 to $5.20 per share last year.

This is no small achievement. After all, AbbVie has also been spending money on growth. In 2020, the company bought biotech firm Allergan, which gave AbbVie the rights to Botox and gave it exposure to the growing aesthetics market.

That’s a great move to add sales and drugs in the development pipeline, as AbbVie currently gets over 40% of its revenue from Humira. Sales of that drug are sagging, and AbbVie’s patent for it will expire next year.

But AbbVie has a slew of other drugs in the works. The firm’s Imbruvica drug created 13.7% of the firm’s sales in 2020, while the Skyrizi psoriasis drug has already been approved and is expected to generate billions in worldwide sales over the coming years.

In other words, AbbVie’s dividend looks secure, and with a big pipeline of hit drugs as well as Botox aesthetics treatments, the firm is a great long-term investment.

Over the last five years, AbbVie has returned more than 129%, not counting its sizable dividend, beating the S&P 500 by 49%. The trend has continued this year. The S&P is down 7.3% as I’m writing this, and yet AbbVie is up 5%.

As you can see, it’s a great firm with cutting-edge products. That makes AbbVie stock a terrific way to build your wealth, especially if you reinvest the dividends and grow your portfolio.

Cheers and good investing,

— Michael A. Robinson

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Source: Strategic Tech Investor