As we approach number one in the top ten flock, the dollar value has increased. Thus far I have discussed ABR (a REIT) and GAIN (a BDC hybrid). This week the stock is AbbVie Inc (ABBV). ABBV is a long-term holding, and I see no immediate reason to think otherwise.
Our Current Ownership of ABBV
Cindie and I own a combined total of 600 shares of ABBV in two accounts: my ROTH, and Cindie’s traditional IRA account she inherited from her mother. I purchased 500 ABBV shares in my traditional IRA but moved them to the ROTH IRA in April 2019. At that time, the shares were trading for $77.57, making it a great time to pay the income tax on the conversion. As you can see, this was a prudent move, as the shares are now trading at $116.12. This is one of several reasons that I like bear markets or moving positions when they are falling out of favor.
The shares continued to trade down in 2019, recovered, and then plummeted in March 2020 when Covid-19 struck. However, since then, the price of the shares has grown significantly.
Why Does ABBV Qualify for the TOP TEN?
You may have seen the commercials for ABBV pharmaceuticals. Two popular ones are HUMIRA and SKYRIZI. The P/E ratio is a sensible 9.24 and the dividend yield is a delightful 4.48%. As my readers know, I also want to see a rational dividend payout ratio (41.39%), a solid 5 Year Growth Rate for the dividend (18.09%), and a history of increasing dividends. ABBV has been paying dividends for eight years and has increased the dividend eight years.
The Health Care and Pharmaceutical Playing Field
According to Seeking Alpha, there are 897 Health Care investments you can choose from. Of those, 421 are biotechnology companies. Although ABBV is not rated in the top ten investments, for various reasons, they are 110 out of the 897 and 51 out of the 421. But two cautions are in order. First, ABBV has the highest dividend in the top 110 health care stocks. Secondly, most of the top 100 health care stocks are micro-cap or small-cap stocks with a ton of risk. Those do not fit my criteria for long term investing. In fact, number one of the 897 is Capital Senior Living Corporation develops, owns, operates, and manages senior housing communities in the United States. CSU has a tiny market cap of $100M and they don’t pay a dividend.
In the biotechnology realm, the top 50 investments pay no dividend and are high-risk investments. So, based on my long-term strategy, it makes sense for us to own shares of ABBV.
ABBV’s Sector, Industry, and Market Cap
Sector: Health Care
Market Cap: $205B
AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals in the worldwide. The company offers HUMIRA, a therapy administered as an injection for autoimmune and intestinal Behçet’s diseases; SKYRIZI to treat moderate to severe plaque psoriasis in adults; RINVOQ, a JAK inhibitor for the treatment of moderate to severe active rheumatoid arthritis in adult patients; IMBRUVICA to treat adult patients with chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma, waldenström’s macroglobulinemia, marginal zone lymphoma, and chronic graft versus host disease; VENCLEXTA, a BCL-2 inhibitor used to treat adults with CLL or SLL; and MAVYRET to treat patients with chronic HCV genotype 1-6 infection. It also provides CREON, a pancreatic enzyme therapy for exocrine pancreatic insufficiency; Synthroid used in the treatment of hypothyroidism; AndroGel for males diagnosed with symptomatic low testosterone; Linzess/Constella to treat irritable bowel syndrome with constipation and chronic idiopathic constipation; Lupron for the palliative treatment of advanced prostate cancer, endometriosis and central precocious puberty, and patients with anemia caused by uterine fibroids; and Botox therapeutic. In addition, the company offers ORILISSA, a nonpeptide small molecule gonadotropin-releasing hormone antagonist for women with moderate to severe endometriosis pain; Duopa and Duodopa, a levodopa-carbidopa intestinal gel to treat Parkinson’s disease; Lumigan/Ganfort, a bimatoprost ophthalmic solution for the reduction of elevated intraocular pressure (IOP) in patients with open angle glaucoma (OAG) or ocular hypertension; Ubrelvy to treat migraine with or without aura in adults; Alphagan/ Combigan, an alpha-adrenergic receptor agonist for the reduction of IOP in patients with OAG; and Restasis, a calcineurin inhibitor immunosuppressant to increase tear production. The company was incorporated in 2012 and is based in North Chicago, Illinois.