When investing in dividend stocks, paying attention to the right things is essential. A high yield can be attractive, but the most critical factor to consider is a company's underlying operations.
Businesses that are solid enough to perform well over extended periods, while consistently raising their payouts, are precisely what income investors should gravitate toward. Here are two corporations which fit that description: AbbVie(NYSE: ABBV) and Gilead Sciences(NASDAQ: GILD).
These two healthcare dividend payers are worth investing in this month since they have the profile of "forever" stocks, in addition to above-average yields. Read on to learn more about these companies.
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1. AbbVie
There are hundreds of dividend-paying stocks on equity markets, and a select few have earned the title of Dividend Kings after raising their payouts for at least 50 consecutive years. AbbVie is part of this elite group.
The company's streak stands at 53 years when factoring in the time it spent as a division of its former parent company, Abbott Laboratories. That alone makes AbbVie worth serious consideration for income investors, but there's more to this company.
AbbVie markets drugs across a range of therapeutic areas but is best known for its work in immunology. Its two top-selling medicines, Skyrizi and Rinvoq, are both immunosuppressants.
These therapies are surprising even AbbVie's management with how fast their sales are growing. After losing patent exclusivity for its former top-selling drug in 2023, rheumatoid arthritis medicine Humira, AbbVie predicted it would return to top-line growth this year. However, it happened last year, ahead of schedule, thanks largely to Skyrizi and Rinvoq.
Recently, management increased its 2027 combined guidance for these medicines to more than $31 billion from the previous projection of about $27 billion.
Besides these two products, AbbVie's lineup features a slew of other key medicines, including its Botox franchise. More importantly than any single medicine, though, AbbVie proved it can survive any patent cliff by navigating one for the most lucrative drug in history, Humira.
That speaks volumes about the company's underlying business. Its pipeline boasts dozens of programs that should lead to more key approvals and label expansions in the future.
AbbVie has an impeccable dividend track record and a rock-solid business. Its forward yield tops 3.5%, well above the S&P 500's average of 1.3%. AbbVie has the makings of a dividend stock that's worth holding forever.
2. Gilead Sciences
Gilead Sciences is another leading drugmaker. The company made its name, in part, due to its dominance in the market for HIV medicines, where it's the leader. Gilead's work in HIV continues to be its most important. In the first quarter, the company's sales remained flat, compared to the year-ago period of $6.7 billion. That was due to lower sales from its coronavirus medicine Veklury.
However, the company's HIV business grew its revenue by 6% year over year to $4.6 billion. Biktarvy remains the top prescribed HIV regimen in the U.S., while Descovy for PrEP is among the leading therapies in its niche.
Though Gilead relies quite a bit on its HIV business, it's working on diversifying its portfolio. Veklury was the first therapy for COVID-19 to earn approval in the U.S. and has been a net benefit for the company, despite its somewhat unpredictable year-to-year trajectory. Without it, the biotech's financial results in the past five years would have been worse, and it has remained effective despite evolving strains of the virus.
Gilead is looking to build a strong oncology business, too. Over a third of the company's 58 pipeline programs are in this area. The company will continue to make innovations within HIV as it has for a long time. The stock should perform well in the long run, thanks to its innovative abilities and well-established position in the difficult-to-navigate healthcare industry. It should also be able to sustain its dividend program.
Gilead Sciences' forward yield is 3.2%, and its dividends increased by almost 84% in the past 10 years. This is another stock that long-term income-seeking investors can't go wrong with today.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Gilead Sciences. The Motley Fool has a disclosure policy.
