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Sunday, November 22, 2015

Recent Transfer: AbbVie Inc.

AbbVie Inc. (NYSE:ABBV) is a world-wide, research-based biopharmaceutical company that develops and markets products to treat conditions such as chronic autoimmune diseases, including rheumatoid arthritis, psoriasis and Crohn's disease; hepatitis C; human immunodeficiency virus (HIV); endometriosis; thyroid disease; Parkinson's disease; complications associated with chronic kidney disease and cystic fibrosis, and other health conditions. ABBV was incorporated in 2012 and is based in North Chicago, Illinois.

I'm busy transferring stocks from my portfolio at Scottrade to DivGro. So far, I've transferred Coca Cola (NYSE:KO), Proctor & Gamble (NYSE:PG), and Kimberly-Clark (NYSE:KMB), adding $269.21 to DivGro's projected annual dividend income. In the process, I'm detailing past transactions and giving reasons for being a shareholder.

I bought 36 shares of ABBV in August this year at an initial yield on cost (YoC) of 2.92%. Recently, ABBV announced a dividend increase of 11.76%, from 51¢ to 57¢ per quarter, so my YoC now is 3.26%.

With this transfer, DivGro's projected annual dividend income increases by $82.08 and I'm adding $18.36 of past dividend income. 

2015-08-17 Bought: 36 shares of ABBV at $69.89 per share: $ 2,516.20
2015-11-16 Dividend on 36 shares at 51¢ per share:  $ 18.36
 Total Capital Invested $ 2,516.20

Total Dividends Received:$ 18.36

The following chart shows a 1-year history of ABBV's share price and indicates when I bought my shares. My timing was rather poor, as ABBV is now trading at about $61 per share, which represents an unrealized loss of 12%.
Source: Scottrade


ABBV spun off from Abbott Laboratories (NYSE:ABT) in January 2013, so the company does not have a long track record of paying and raising dividends. So, why would I want to own shares of ABBV now?

Here are some reasons I like ABBV and why I decided to transfer the shares to DivGro:
  1. The addition of ABBV doubles my exposure in the Health Care sector.
  2. ABBV's top-selling product, Humira, generates over $14 billion a year.
  3. The company has several other products that each generate more than $1 billion of income annually.
  4. ABBV has top-notch financials, with a double-digit growth rate for each of the last 3 years.
  5. On top of ABBV's yield of 3.7%, I expect significant dividend growth in the next few years.
Do you own shares of ABBV? Do you think ABBV is a good dividend growth prospect?


  1. I do own shares of ABBV and plan to keep them for the foreseeable future. I have not added to that position in some time but if another major drop occurs like what happened a few weeks ago I'll jump in again. What brokerage are you moving to from Scottrade?

    1. I'm a "latecomer" to ABBV, but I really like the prospects. I think I'll also add to my position if the stock takes another drop!

      I'm actually keeping my Scottrade account. Earlier, the stocks in my Scottrade account were a mix of speculative and dividend paying stocks. Now I only have dividend paying stocks, so I figured I'd like to track them in the same way as my DivGro stocks (hosted at FolioInvesting). These "transfer" posts is my way of capturing the necessary details.

  2. ABBV's coming Humira patent expiration scares me. The company gets the bulk of its revenue from Humira. The yield is nice though. Humira's the big unknown - how much will losing patent protection impact sales? If it's just a little, the stock is an absolute bargain. If it's a lot, then it's a value trap.

    1. The patent expires toward the end of 2016 in the USA and in 2018 in Europe. From what I've read, the biologic composition of Humira would make generic completion difficult, since ABBV holds several hundred additional patents on how the drug is formulated and manufactured, which don't expire until 2022. Though revenue will be impacted from competition, there seems to be a barrier to entry. Several other drugs are in the pipeline, including Imbruvica, a blood cancer drug with strong clinical results.

      It would be interesting to see how ABBV navigates this environment!

  3. Good buy although I heard about the Humira patent expiration as well but you are on top of it. Good luck with ABBV!



    1. Thanks, BSR -- a Morningstar analyst is estimating a 20% decline in revenue for Humira by 2019 and gives ABBV a narrow moat assessment. On the other hand, he raised fair value to $65 from $58. With ABBV trading at $61 right now, that would represent a 7% discount.


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