Dividend investors don’t buy shares of companies hoping they will suspend their payouts soon. The longer a corporation maintains its dividend program, the more attractive it is to income seekers, all else being equal. However, few businesses on Wall Street can sustain consistent — and growing — dividends for a long time.
Let’s discuss two that have what it takes to pay investors regular dividends for good: Amgen(NASDAQ: AMGN) and AbbVie(NYSE: ABBV).
Biotech giant Amgen first declared a dividend in 2011. Since then, the drugmaker has increased its payouts regularly, growing them by a whopping 750% in that period. That’s a pretty good track record, and there is more where that came from, given Amgen’s excellent underlying business. The company has a deep lineup of medicines that includes growth drivers like Repatha, a drug used to decrease the risk of heart attacks in certain patients; asthma therapy Tezspire; Teppezza, which treats thyroid eye disease (TED), and more.
In 2024, Amgen’s revenue increased by 19% year over year to $33.4 billion. Though that was partly due to acquisitions, the drugmaker’s sales grew organically by 7% year over year, which is still good for a biotech of this size. Sure, Amgen has encountered issues. Late last year, the company’s shares dropped off a cliff after its investigational weight loss treatment, MariTide, delivered positive, but not positive enough, results in phase 2 studies.
However, Amgen has already recouped most of these losses, unsurprisingly. For one, MariTide could still go on to carve out a niche in the lucrative and fast-growing weight loss space. Further, Amgen has several other pipeline candidates that should earn approval in the next few years. Even some of the company’s current growth drivers will earn label expansions and improve their sales over time. That includes Tezspire, which delivered positive phase 3 results in patients with chronic rhinosinusitis in November.
Tepezza remains the only drug approved by the U.S. Food and Drug Administration for TED, and Amgen has been launching it in other countries. Amgen can consistently develop newer and better drugs, just as it has for a long time, and deliver solid financial results that will allow it to maintain its dividend program. Amgen offers a forward yield of about 3%, compared to the S&P 500’s average of 1.3%.
The company’s cash payout ratio is about 47%, giving it plenty of room to grow its dividend. Here’s the bottom line: Amgen is an excellent stock for long-term, income-seeking investors.
Once a division of the medical device giant Abbott Laboratories, AbbVie has been a stand-alone publicly traded company since 2013. In that time, the drugmaker produced market-beating returns and increased its dividends at a good clip. Considering its time as a unit of Abbott, AbbVie has increased its payouts for 52 consecutive years, making it a Dividend King. It also offers a forward yield of 3.1% and a reasonable cash payout ratio of about 62%.
What has been the company’s secret all these years? Perhaps it isn’t much of a secret, but AbbVie marketed one of the best-selling medicines in the history of the industry: immunosuppressant Humira. The rheumatoid arthritis drug helped AbbVie grow its revenue and earnings at a good clip for more than a decade. Now that Humira has lost its patent exclusivity, AbbVie is still delivering good results thanks to such products as Skyrizi and Rinvoq (two immunology products that actually compete with Humira in many indications), its Botox franchise, cancer medicine Venclexta, migraine treatment Qulipta, and others.
AbbVie’s current crop of growth drivers will also run out of patent exclusivity eventually, but it says a lot that the company can survive one of the biggest patent cliffs in the history of the industry and continue growing its dividends after. So, AbbVie’s most important asset isn’t any individual drug. It’s the company’s ability to continuously develop and market blockbusters. Its revenue will occasionally start moving in the wrong direction after biosimilars erode its products’ sales, but it will recover.
That’s also why investors can trust AbbVie to maintain its dividend program for a long time. It takes a strong underlying business to pull that off, something AbbVie clearly has. Dividend investors can’t go wrong with this company.
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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 and Abbott Laboratories. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.
2 Dividend Stocks to Buy for a Lifetime of Passive Income was originally published by The Motley Fool
Shelley Larkin is a news writer for Canary Islands News. She writes about arts, construction, automotive, travel, real estate, and fashion. She is also interested in sports and movies.
Shelley enjoys spending time with her family and friends, listening to music and going to the movies.
