I just bought this pharma stock for its next generation of blockbuster drugs — and its dividend
We just initiated a new position in AbbVie Inc. at around $280 a share for our Enhanced Dividend Income Portfolio. While the dividend is certainly part of the appeal, I’m really into the company’s next chapter of growth. The North Chicago-based biopharmaceutical company is best known for Humira, its former blockbuster treatment for autoimmune diseases. But with Humira facing competition from lower-cost alternatives, AbbVie has had to reinvent itself. Judging by the growth of its newer drugs, that transition is paying off. Key points AbbVie’s newer immunology drugs are successfully replacing revenue lost from Humira. Neuroscience business is growing rapidly, providing another source of growth. Established aesthetics franchise gives additional diversification. AbbVie’s second-quarter revenue increased 10.2% to approximately $17 billion, while adjusted earnings per share jumped nearly 23% to $3.65. The company also reported an adjusted operating margin of 48.3%. That’s an impressive combination of double-digit growth and strong profitability, putting AbbVie in a good position to continue growing earnings and supporting its dividend. Why I’m buying The post-Humira transition is working AbbVie faced major challenges when its best-selling prescription drug Humira lost U.S. exclusivity in 2023. But the company has successfully built two major growth engines in its place: Skyrizi and Rinvoq. In the second quarter, Skyrizi sales climbed 24.4% to $5.5 billion, while Rinvoq revenue increased 24.5% to $2.5 billion. Together, these drugs generated more than $8 billion in quarterly revenue, compared with just $756 million from Humira. Both drugs treat chronic inflammatory conditions, including Crohn’s disease and ulcerative colitis. As more patients adopt these treatments and AbbVie pursues additional approved uses, I see a long runway for growth. The neuroscience business is gaining momentum AbbVie’s neuroscience business is growing rapidly, too. Second-quarter revenue increased more than 20% to approximately $3.2 billion. That portfolio includes Vraylar, which treats certain psychiatric conditions, as well as migraine treatments Ubrelvy and Qulipta. AbbVie also has Botox Therapeutic, used for conditions including chronic migraine, and Vyalev, a treatment for certain patients with advanced Parkinson’s disease. This gives AbbVie another substantial business as its treatments reach more patients. Aesthetics adds another dimension to the business Investors shouldn’t overlook AbbVie’s aesthetics business. Through Allergan Aesthetics, the company owns some of the most recognizable brands in cosmetic treatments, including Botox Cosmetic and Juvéderm. ABBV YTD mountain AbbVie, YTD This isn’t currently AbbVie’s fastest-growing business (second-quarter aesthetics revenue was essentially flat at approximately $1.28 billion, and Juvéderm sales declined 6%). But I see it as another valuable piece of the company, with established brands and exposure to demand for minimally invasive cosmetic procedures. If consumer spending and procedure volumes improve, that could provide an additional boost to growth. Why now? AbbVie shares have rallied this year and are now trading near their 52-week high. At our purchase price of approximately $280, the stock trades at about 20 times management’s latest 2026 adjusted earnings guidance. That’s not cheap, but it’s a reasonable price for a company delivering double-digit revenue growth and strong profitability. We’re also getting paid to wait. AbbVie pays a quarterly dividend of $1.73 per share, or $6.92 annually. At our entry price, that’s a yield of roughly 2.5%. The company has a long history of raising its dividend, which is exactly what I look for in our enhanced dividend income portfolio. I want companies that can grow their earnings and increase the income they return to shareholders over time. Bottom line There are risks. AbbVie is increasingly dependent on Skyrizi and Rinvoq, and competition, drug pricing pressure and future patent expirations could weigh on growth. But AbbVie has moved beyond the most difficult part of its Humira transition. We’re investing in a highly profitable company with renewed earnings momentum and multiple sources of growth. AbbVie is a dividend growth stock entering its second act, and that’s why we bought it. Kevin Simpson is the founder and CEO of Capital Wealth Planning. Under his leadership, the firm has grown to manage over $19 billion in assets. Disclosures: Simpson owns in Capital Wealth Planning. All opinions expressed by the [CNBC Pro contributors] are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. 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