Sometimes misperceptions can work in investors’ favor. When others think a stock’s prospects aren’t that good, you can win big if that view is too pessimistic.
Several stocks that pay fantastic dividends fall into this category. Here are three dividend stocks to double down on right now.
1. AbbVie
AbbVieIt is (NYSE:ABBV) The best-selling drug, Humira, is past its peak. Sales continue to fall in the face of competition from biosimilars.
The company’s overall turnover is barely increasing. AbbVie’s adjusted earnings per share (EPS) fell year-over-year in the first quarter of 2024. This may not seem like a good stock to buy, but there’s more to it.
Robust growth is likely imminent for AbbVie. Sales of Humira’s two successors, Skyrizi and Rinvoq, are soaring. Migraine therapies Ubrelvy and Qulipta continue to gain momentum. AbbVie’s oncology line looks strong with Venclexta and new cancer drugs Elahere and Epkinly.
Rob Michael, AbbVie’s president and chief operating officer who is expected to become CEO in July, said during the company’s first-quarter earnings call that AbbVie remains “well-positioned to generate revenue CAGR of business (compound annual growth rate) high in the single digits until the end of the year. decade.” AbbVie’s board of directors voted unanimously for Michael to replace longtime CEO Rick Gonzalez, who will become executive chairman.
Income investors should love AbbVie’s forward dividend yield of nearly 4%. The company is a dividend king, with 52 consecutive years of dividend increases. I expect AbbVie’s dividend to continue growing for a long time.
2. Herringbone
Concerns about climate change are driving a shift away from fossil fuels in favor of renewable energy sources. Big oil companies like Chevron (NYSE: CVX) face an existential threat. Or do they?
Chevron’s production increased 12% year-over-year in the first quarter. The company expects more growth upstream until at least 2027.
It is also investing in several major projects that will increase its capacity. One industry executive predicts an oil shortage by the end of 2025. Chevron stands to benefit enormously if this prediction proves accurate.
At the same time, Chevron is hedging its bets. It plans to reduce its use of carbon dioxide in upstream production by 35% over the next four years. The company is investing money in hydrogen, renewable fuels and carbon capture technology, and the latter could ultimately allow oil and gas to be produced and used without any significant environmental impact.
Chevron remains a favorite among income investors with its 4.1% dividend yield. The dividend has been increased for 37 consecutive years, and I hope this trend continues.
Investors should also benefit from the “invisible dividends” of share buybacks. Chevron plans to resume its share buybacks to the tune of about $17.5 billion a year now that Hesse shareholders voted in favor of an acquisition by the oil and gas giant.
3. Pfizer
Once-booming COVID-19 vaccine sales plunged, leading to decline PfizerIt is (NYSE:PFE) overall revenues and profits. The major pharmaceutical maker faces a looming patent cliff, with several blockbuster drugs losing patent exclusivity over the next few years. The company may seem like a stock to avoid like the plague, but I think it’s a great stock to buy.
Of course, Pfizer has major hurdles to overcome. However, the company also has a solid plan. More importantly, it has solid products. Pfizer projects that its new products (and newly approved indications for existing products) should generate enough additional revenue to offset the negative impact of the patent cliff, and then some.
The biopharmaceutical company also used much of the money it made when COVID-19 was a more serious concern to gobble up smaller drugmakers. Since 2022, Pfizer has acquired Arena, Biohaven, Global Blood Therapeutics, ReViral and Seagen. These deals and others in the works could generate about $25 billion in new annual revenue by 2030.
While investors wait for Pfizer to return to growth, the company is paying a juicy forward dividend yield of over 5.9%. Pfizer reiterated in its first quarter update that it intends to maintain and increase its dividend while paying down debt and reinvesting in the business.
Should you invest $1,000 in AbbVie right now?
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Keith Speights holds positions at AbbVie, Chevron and Pfizer. The Motley Fool ranks and recommends Chevron and Pfizer. The Motley Fool has a disclosure policy.
3 Dividend Stocks to Double Right Now was originally published by The Motley Fool
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