Dividend stocks are always great additions to a portfolio, as they offer investors the opportunity to earn passive income during any economic or market environment. This may compensate for weakness in your portfolio during tough market times and supercharge performance during better days — so you’ll always be happy to hold onto at least a few of these players.
Where to find dividend stocks? They’re present throughout industries, but you’ll notice many in the healthcare space. Generally, dividend players are well-established companies — such as some of the world’s top pharma names — that don’t have to pour every dollar into growth. They can afford to reward shareholders regularly. And two that fall into this category are AbbVie (ABBV +0.20%) and Pfizer (PFE +0.29%).
These companies are both committed to sharing their winnings with investors. But which of these two is the better buy in September? Let’s find out.
Image source: Getty Images.
The case for AbbVie
It’s important to note that AbbVie is a Dividend King, meaning the company has raised its dividend for more than 50 consecutive years. This shows that dividend growth is a priority for this pharma giant, and with such a streak, it’s likely AbbVie will continue along this path. And with free cash flow of $18 billion, it has the financial strength to do so. Today, AbbVie pays a dividend of $6.92, representing a dividend yield of 2.6%, which is higher than the 1.06% dividend yield of the S&P 500. So all of this is positive.
Today’s Change
(0.20%) $0.52
Current Price
$264.48
Key Data Points
Market Cap
Day’s Range
$261.23 – $266.60
52wk Range
$190.75 – $267.47
Volume
1.1K
Avg Vol
6.2M
Gross Margin
71.42%
Dividend Yield
2.58%
On top of this, AbbVie has proven that it can continue to generate growth after losing exclusivity on one of the world’s best-selling drugs, immunology blockbuster Humira. AbbVie prepared by developing its immunology portfolio, and today, two other immunology products are delivering double-digit quarterly gains into the billions of dollars. In the recent quarter, Rinvoq and Skyrizi together brought in $8 billion — that’s on the company’s total of $16 billion in net revenue.
Meanwhile, AbbVie has a full portfolio of treatments across specialty areas, from neuroscience to oncology. All of this is driving growth in revenue and profit.
The case for Pfizer
Pfizer is in the middle of an exciting recovery story. The pharma giant saw earnings soar after the release of its coronavirus vaccine and treatment — revenue even reached a peak of more than $100 billion back in 2022. But as the pandemic reached its later stages, demand for these products declined, and that resulted in much lower revenue for Pfizer.
The company shifted its investments and costs to account for this and has made major efforts to boost its pipeline internally and through acquisitions. And all of this is powering revenue higher. For example, in the recent quarter, Pfizer said its focused execution resulted in an 18% operational revenue gain for a selection of top recently launched and acquired products. Pfizer has reported profits as well as losses periodically in recent quarters as it continues its recovery. Meanwhile, strength in its oncology platform and the potential of its late-stage pipeline could drive future growth.
Today’s Change
(0.29%) $0.08
Current Price
$27.74
Key Data Points
Market Cap
Day’s Range
$27.53 – $27.92
52wk Range
$23.58 – $29.21
Volume
22.1K
Avg Vol
40.6M
Gross Margin
64.83%
Dividend Yield
6.20%
As for dividends, Pfizer’s has remained stable in recent times, at $1.72 with a 6.2% yield, and though some investors have worried that the company could suspend this payment, Pfizer has confirmed its commitment to maintaining it.
“We feel extremely confident that we will — even the most stretched scenarios that we are running, we will be able to maintain our dividend,” chief Albert Bourla said during the recent earnings call.
The better buy?
AbbVie and Pfizer both make interesting pharma investments — and if you’re looking for a turnaround story, you might favor Pfizer as the company is making significant progress. But here, I’m focused on the strongest dividend player to buy right now, and with that in mind, I would go for AbbVie.
Though Pfizer clearly is committed to maintaining its dividend, AbbVie has the free cash flow to keep its payments growing year after year — as it’s done for decades. Meanwhile, AbbVie has proven its ability to grow following the Humira loss of exclusivity. That’s why right now in September, this Dividend King is the better buy.
