Two dividend stocks to watch in 2025
Investing in dividend stocks is great for many reasons, with one of the biggest benefits being that companies that can pay growing dividends over the long term usually have a strong and stable underlying business.
It's even better to invest in excellent dividend stocks when their prices seem attractive, which isn't always easy to find because these companies are highly valued.
AbbVie $ABBV: Stability despite challenges
Recent years have been turbulent for AbbVie. The company lost patent exclusivity on its best-selling drug Humira in early 2023, which led to a significant drop in revenue, earnings, and stock price. Despite this, the company managed to recover from the blow, but its stock suffered further losses late last year when one of its promising products, emraclidine (a potential treatment for schizophrenia), failed in Phase 2 clinical trials.
While AbbVie was able to recoup most of the losses from that failed phase, its stock is still fairly valued, at least according to one of the most popular indicators of market value. The company's price-to-earnings (P/E) ratio is 15.5, below the healthcare sector average of 17.5.
Despite the loss of the patent on Humira, which generated more than $20 billion a year, AbbVie's 2024 revenue is up 3.7% to $56.3 billion. Adjusted earnings per share fell 9% to $10.12, partly due to acquisition-related costs. Replacing such a blockbuster drug is challenging, which is why revenue growth in such a situation is considered a success. And while the failure of emraclidine is not ideal, AbbVie has dozens of other projects in its pipeline and plenty of resources to partner with smaller pharmaceutical companies.
AbbVie's business remains strong and its dividend program is stable. The company is a "Dividend King," meaning it has increased its dividend for 52 consecutive years. It currently offers a dividend yield of around 3.7%, which is very attractive.
Gilead Sciences $GILD: Interesting price/earnings ratio and strong pipeline
Gilead Sciences has had a great run over the past 12 months. The stock price is up nearly 29%. Still, Gilead stock looks like a bargain given its P/E ratio of 12.9. The company has several factors playing in its favor. Its drug portfolio, especially in the HIV space, continues to show solid results. In the first nine months of 2024, revenues grew 6% to $21.2 billion.
Gilead reported adjusted earnings per share of $2.72, down nearly 46% from the same period last year, but that decline was partly due to acquisition-related costs. HIV drug Biktarvy remains the leader in the U.S. market and has regained market share, which now stands at more than 49%. In addition, Gilead Sciences has significantly weaned itself off its dependence on its coronavirus drug, Vectura, which helped keep the company afloat during the early years of the pandemic.
As for the pipeline, Gilead Sciences continues to move forward on several fronts. The company is developing drugs across multiple therapeutic areas, including HIV, immunology and oncology. In recent years, it has significantly increased its efforts in oncology and is currently conducting more than two dozen clinical trials, many of which are in Phase 3. Some existing products, such as the long-acting HIV drug Sunlenca, will be expanded in the future.
Gilead Sciences has a strong financial performance and its dividend yield is approximately 3.1%. The company has increased its dividend by 79% over the past ten years.
Disclaimer: You will find a lot of inspiration on Bulios, but stock selection and portfolio construction is up to you, so always do a thorough analysis of your own.
Source: TheMotleyFool
