November 6, 2016

Is AbbVie's Dividend Worth the Risk?

An attractively high dividend rate may have AbbVie on income investors' radar, but there are a few things investors should know about this company before they dive in and buy the stock for its dividend payout.


AbbVie Inc. (NYSE:ABBV) investors are being rewarded with an industry-leading dividend yield of 4.5%. However, patent threats to its best-selling medicine, Humira, make investing in this dividend-paying healthcare giant a bit of a gamble. Can AbbVie thwart its patent risk, or will the company take a big hit?



What's at stake

AbbVie's Humira is the world's best-selling medicine. It's an autoimmune disease drug that costs tens of thousands of dollars per year and that's used to treat patients with a range of diseases, including the blockbuster rheumatoid arthritis and psoriasis indications.

In 2015, widespread global use resulted in Humira sales in excess of $14 billion, and in Q3, Humira's sales were running at an annualized $16 billion pace. Overall, Humira is solely responsible for 63% of AbbVie's total revenue, and that's potentially bad news, given that a key Humira patent expires in December.



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