People invest in dividend stocks for various reasons. Some want the passive income; others reinvest the cash to boost long-term returns; still others find that corporations that can dish out regular (and growing) payouts are worth investing in. But few such investors would include dividend cuts on their wish list — most want the payouts to go for as long as possible.
Though many income stocks will eventually have to suspend or decrease their dividends, some seem solid enough to pay investors for a lifetime. Let’s consider two examples: AbbVie (NYSE: ABBV) and Visa (NYSE: V).
1. AbbVie
AbbVie was originally a subdivision of Abbott Laboratories. The drugmaker split from its former parent company in 2013. Since then, AbbVie has been known for at least two things: its blockbuster rheumatoid arthritis drug Humira, and its consistent dividend increases.
However, things are changing. Humira has been off-patent in the U.S. since last year. Considering that the drug was AbbVie’s biggest growth driver for the past decade, it’s normal for shareholders to worry a bit about what will happen to its payouts.
But AbbVie is showing that it’s a strong company with or without Humira. Though revenue and earnings fell after the immunology medicine lost exclusivity, AbbVie can count on two other drugs in this area to fill the gap eventually: Skyrizi and Rinvoq actually compete with Humira in several indications. Combined revenue from these two medicines should hit $27 billion by 2027, according to management. That’s well above Humira’s peak annual sales.
AbbVie is an innovative company that should regularly continue delivering brand-new medicines. The drugmaker planned ahead for Humira’s loss of patent exclusivity; it will almost certainly do the same for Skyrizi and Rinvoq, and whatever other key growth drivers it depends on after those two also lose patent protection. That’s what makes AbbVie a stock worth buying and holding onto for good. Individual drugs will eventually stop driving top-line growth in a decade or so, but a culture centered around innovation can last a lifetime –…
..
