Big Pharma dividends

The recent stock market meltdown has presented a lot of bargains for those with some cash to invest. Consider, for example, large-cap pharmaceutical concern Abbvie (NYSE: ABBV), spun off from Abbott Laboratories in 2013. Its shares recently traded at a forwardlooking price-to-earnings (P/E) ratio of less than 9. That kind of low valuation might make sense for a company likely to experience an earnings decline, but that’s not the case for Abbvie.

Granted, Abbvie faces some headwinds for its topselling drug, Humira. Rival biosimilar drugs are already eating into the blockbuster drug’s market share in Europe and will do the same in the U.S. beginning in 2023. However, Abbvie has been planning for this eventuality for years, and isn’t as dependent on Humira as it used to be, thanks in large part to fast-rising sales for cancer drugs Imbruvica and Venclexta.

Its pipeline has also been fruitful, with new immunology drugs Rinvoq and Skyrizi likely to rake in billions of dollars in sales annually over the next decade. And Abbvie’s pending acquisition of Botox maker Allergan will further reduce its reliance on Humira.

Even with the challenges to Humira, Wall Street analysts expect Abbvie’s earnings will increase by an average of close to 5% annually over the next five years. With the company’s dividend recently yielding 5.6%, Abbvie looks likely to deliver attractive total returns for a long time to come.