Two Notable Dividend-Yielding Shares Worth Considering During Market Drops
AbbVie (ABBV decreasing by 0.59%) and Amgen (AMGN dropping by 0.54%) share some similarities. They are both prominent pharmaceutical companies with a robust track record of dividends. Recently, they experienced substantial daily share drops due to underwhelming clinical results for promising drugs.
In spite of these recent hiccups, these health care titans continue to appeal as reliable income stocks, particularly for investors with a patient disposition. Here's why.
1. AbbVie
Acquisitions can yield positive results, but sometimes they fail, as AbbVie is learning the hard way. Following the $8.7 billion purchase of Cerevel Therapeutics, the key asset, emraclidine, fell short in two phase 2 studies. Consequently, AbbVie's shares have plummeted by 13%:
However, AbbVie remains active in the mergers and acquisitions arena. It recently concluded its purchase of Aliada Therapeutics, including an Alzheimer's disease prospect, for $1.4 billion in cash. The company also announced it will acquire Nimble Therapeutics, with an immunology pipeline, for $200 million.
Growth continues for AbbVie despite the significant patent cliff it faced with Humira, its former top-selling drug. The main therapies in its portfolio, including the immunology powerhouses Skyrizi and Rinvoq, are aiding in offsetting Humira-related losses. In Q3, AbbVie's revenue surpassed the previous year's mark by 3.8% to $14.5 billion. Sales for Skyrizi and Rinvoq increased by 50% and 45% respectively, progressing faster than any other drug in its portfolio, even though they generate the highest sales aside from Humira. These two drugs will continue driving AbbVie's growth throughout the next decade.
Beyond acquisitions, AbbVie boasts a deep pipeline with numerous active research programs.
AbbVie is also a fantastic income stock. With 52 uninterrupted years of dividend hikes, including its period under Abbott Laboratories, it's designated as a Dividend King. Since its separation from Abbott in 2013, AbbVie has augmented its dividend by 310%.
Currently, the stock's forward yield stands around 3.8%, surpassing the S&P 500's average of 1.3%. Therefore, despite its recent setbacks, AbbVie should continue delivering impressive returns and dividend growth for an extended period.
2. Amgen
Amgen's recent disappointment stemmed from subpar phase 2 results for its prominent weight loss candidate, MariTide. Although the medicine enabled an average weight loss of approximately 20% after 52 weeks of treatment without a weight plateau, investors do not view these results as impressive enough to unseat the top contenders in the field.
However, Amgen doesn't require a substantial market share chunk from Eli Lilly or Novo Nordisk to succeed. Some forecasts predict the weight loss sector will reach $150 billion by the early 2030s. Amgen's drug appears to function effectively, and slipping into an insignificant segment of this rapidly expanding industry would still be a victory.
Amgen can rely on other motorboats to move forward as well. In the third quarter, its revenue escalated by 23% year over year to $8.5 billion. Much of this growth can be attributed to its acquisition of Horizon Therapeutics for roughly $28 billion last year. Even without that, the top line grew by 8% compared to the year-ago period.
Amgen has effectively integrated Horizon Therapeutics into its operations, gaining control of Tepezza, the only approved medication for thyroid eye disease by the U.S. Food and Drug Administration. Amgen, with its resources, can expand Tepezza's reach in ways that Horizon couldn't. Amgen recently secured approval for this drug in Japan and has plans to target various other regions.
Amgen's Tezspire, a collaborative effort with AstraZeneca for asthma treatment, is making headway in both clinical trials and sales. Beyond MariTide, Amgen has a substantial pipeline, including other weight loss candidates. Amgen's underwhelming phase 2 data for MariTide does not threaten its dividend.
Since 2010, Amgen's dividends have climbed by 201%, and its forward yield now stands around 3.7%. This makes Amgen a worthwhile long-term investment and income stock.
- Given AbbVie's robust finance performance, some investors see this as an opportunity for investing in the company, particularly in its dividend stocks. The company's substantial quarterly revenue growth, due in part to successful acquisitions like Aliada Therapeutics, and its continuous dividend hikes for 52 years, have positioned AbbVie as a strong income-generating stock.
- Similarly, Amgen's financial position also makes it an attractive choice for long-term investors interested in dividend stocks. Despite the underwhelming phase 2 results for its weight loss candidate, MariTide, Amgen's strong revenue growth, driven by acquisitions like Horizon Therapeutics, and its impressive dividend growth of 201% since 2010, indicate that Amgen remains a stable and lucrative income-generating option.
