3 Unstoppable Dividend Stocks to Buy Right Now
Which income investors want to buy stocks with dividends likely to decline and iffy businesses? None. Instead, income investors want practically unstoppable dividend stocks.
Three Motley Fool contributors think they've identified healthcare stocks that fit the bill. Here's why they picked Abbott Laboratories (NYSE: ABT), Amgen (NASDAQ: AMGN), and AbbVie (NYSE: ABBV).
A Dividend King with a diverse business to buy and hold for years
David Jagielski (Abbott Laboratories): Want a top dividend stock that you can safely buy and hold for years? Check out Abbott Laboratories. The company not only has a solid track record for paying and increasing dividends, but its broad and diverse business makes it highly probable that the hikes to its payout will continue for the foreseeable future.
You might dismiss Abbott as a mediocre income stock due to its modest dividend yield of 2%. There are many other high-yielding stocks out there. But the real payoff from owning the stock is over the long haul. The stock is a Dividend King that has increased its dividends for 52 consecutive years. It has also been paying dividends for a century.
The company doesn't just have a solid track record, either. Its future remains promising as Abbott has a lot of different ways it can grow its business. It has pharmaceutical, nutritional, medical device, and diagnostics business units that provide it with varying growth opportunities. In its most recent quarter (which ended in June), the company reported positive organic growth, excluding the impact of COVID-19 tests, of more than 9% across its entire operations. Each one of its segments generated positive organic growth compared to the previous year.
The stock's modest payout ratio of 67% suggests there's still plenty of room ahead for the business to raise its dividend, especially when you consider the strength and diversity which comes with Abbott Laboratories' operations. This is one of the better dividend stocks that buy-and-hold investors can own today.
A solid business, a solid dividend
Prosper Junior Bakiny (Amgen): What is the most crucial thing for dividend investors to consider? A high yield is attractive, as is a competitive dividend per share. One might mention several other dividend-centered metrics, but a company's underlying business remains the most crucial factor to consider. A corporation's dividend is only as good as the business backing it.
That's what makes Amgen such an attractive option. Amgen is a leading biotech company with a solid track record of innovation and a long list of approved products, many of which generate over $1 billion in sales every year.
Its pipeline looks equally exciting, especially as it might have one of the most promising candidates in the exciting weight loss market; Amgen's MariTide produced strong results in phase 2 studies. There's still a long way before it earns approval, if it goes that far. But it already has some analysts excited. According to market researcher Evaluate Pharma, MariTide could generate as much as $2.1 billion in sales by 2030.
Though Amgen's organic revenue growth hasn't been that impressive in the past three years, candidates like MariTide and others will help move things in the right direction. Amgen's dividend program has remained strong throughout. The company's payouts have increased by 55% in the past five years. Its forward yield stands at 2.74%, higher than the S&P 500's average of 1.32%. Thanks to the company's strong fundamentals, investors can trust Amgen to continue raising its dividends.
Another great member of the dividend A-team
Keith Speights (AbbVie): I didn't know that all three of our picks would begin with the letter "A." However, I think it's appropriate because AbbVie truly deserves to be on the dividend A-team.
The big drugmaker spun off from Abbott in 2013. AbbVie therefore inherited Abbott's fantastic track record of dividend increases and is counted as a Dividend King like its parent company. However, income investors should like AbbVie's forward dividend yield of nearly 3.2% even more than they like Abbott's yield.
AbbVie is reasonably valued with its forward earnings multiple of 18.2. The stock's valuation looks even more attractive with the company's growth prospects factored in.
To be sure, AbbVie's revenue and earnings have fallen since its top-selling drug, Humira, lost U.S. patent exclusivity in early 2023. However, a strong rebound should be on the way. Sales are skyrocketing for AbbVie's newer autoimmune disease blockbuster drugs, Rinvoq and Skyrizi. The drugmaker also has great growth drivers in antipsychotic medication Vraylar and its migraine therapies Qulipta and Ubrelvy.
AbbVie's pipeline provides more reason for optimism. The company has over 90 programs in development. These include promising cancer, immunology, and neurological drugs, several 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 positions in AbbVie. Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.
3 Unstoppable Dividend Stocks to Buy Right Now was originally published by The Motley Fool