AbbVie ( ABBV 2.94% ) is one of the top healthcare companies in the world, with a market cap of $256 billion. That's a higher valuation than Abbott Laboratories' $209 billion which AbbVie spun off from in 2013.
The stock has been a major performer for shareholders. But just how much would you have made if you'd invested $25,000 in AbbVie when it first began trading?
Image source: Getty Images.
Today, your shares would be worth more than $100,000
The stock debuted on Jan. 2, 2013, as a spin-off from Abbott Labs, and it was priced at $35. If you'd invested $25,000 into the company then, that would have secured you about 714 shares of the healthcare business.
Currently, the stock trades at around $145, putting the value of those shares at roughly $103,530, a return of 314% -- not including the dividends the company paid over that time.
AbbVie's dividend payout is 3.8%, which is well above the S&P 500 average of 1.3%. And the company has also been increasing its dividends, growing them from $0.40 in 2013 to $1.41 today, for an increase of 253%. For income investors, that gives them an extra incentive to hold on to the stock for the long haul, getting more for their original investment.
When including the dividend payments, AbbVie's stock, since trading publicly, has soundly outperformed not just the S&P 500 but Abbott Laboratories.
ABBV Total Return Level data by YCharts
Why has the stock done so well?
Beyond being attractive for its dividend, AbbVie has also been a growth machine. In just four years, its revenue of $28.2 billion in 2017 has soared to $56.2 billion this past year. And its net income has increased by 117% during that time, from $5.3 billion to $11.5 billion. The business is consistently profitable, earning a 20% profit margin over the past 12 months.
Back in 2017, the company had 11 key drugs contributing to its revenue, with rheumatoid arthritis medication Humira leading the way at $18.4 billion, accounting for 65% of all net sales. Today, AbbVie has more than 20 drugs itemized on its earnings report as being key contributors. Humira's sales of $20.7 billion will likely decline in the future as it faces losses in exclusivity, but the business isn't as dependent on it -- just 37% of its revenue comes from that drug. AbbVie closed on a $63 billion acquisition of Botox-maker Allergan in 2020 that has given it a whole new segment focused on aesthetics, and that makes the company even more diversified.
Is it still a buy today?
Today, AbbVie's stock trades at a forward price-to-earnings multiple of 10, which is still relatively modest when compared to other notable healthcare companies, including Abbott Laboratories and Eli Lilly, which trade at 24 and 28 times their future earnings, respectively.
There's considerable value here from an investor's standpoint, as AbbVie can be a great source of recurring income with its juicy dividend yield and the business is well-positioned as doctors and hospitals resume their usual operations.
Although there are concerns about the loss of revenue from Humira as it begins to lose exclusivity next year, AbbVie's business looks to be in solid shape and a diverse portfolio of drugs will help it keep growing for many years to come, continuing to reward investors who hold on.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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February 27, 2022 at 06:15PM
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If You Invested $25,000 in AbbVie In 2013, This Is How Much You Would Have Today - Motley Fool
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