Forget Novo Nordisk, buy this magnificent dividend stock instead

The pharmaceutical giant Novo Nordisk (NGO 1.20%) it’s a great stock for a number of reasons. The company continues to deliver excellent financial results thanks to a range of medicines with incredibly fast growing sales. Also, its pipeline continues to produce more gems.

Novo Nordisk’s stock market performance has been incredible in recent years. It’s hard to find a better growth stock among drugmakers of similar size. However, it is not a particularly good dividend stock.

Investors looking for solid, reliable dividend payers may want to look elsewhere. AbbVie (ABBV -1.16%) it’s a much better option in that department. Read on to find out why.

AbbVie’s balance sheet versus Novo Nordisk’s

Novo Nordisk pays dividends twice a year, in March and August. Although its dividend per share has increased over the years, the growth is not very impressive. Nor is Novo Nordisk’s forward yield of 1.13% competitive. The profile of the drugmaker in this department is not what dividend investors typically look for.

NVO Dividend Data by YCharts.

AbbVie looks much better. The company pays a quarterly dividend and boasts a forward yield of 3.2%, much higher than S&P 500his average of 1.32%. AbbVie became an independent company in 2012 after splitting from its former parent company, Abbott Laboratories.

Since then, it has increased its payouts by an impressive 288%. When you include its time as a division of Abbott Laboratories, AbbVie is considered a Dividend King with an active streak of 52 consecutive payout increases — a rare feat.

AbbVie’s dividend profile looks much better than Novo Nordisk’s, but is it enough?

More than just a dividend stock

A company’s forward yield, dividend per share, dividend payout frequency or historical growth can tell us a lot. However, none of this matters if the corporation’s core business is in shambles.

Investors were recently reminded that even top dividend stocks can cut their payouts when the going gets tough. Walgreens Boots Alliance and Medical Property Trust — two solid dividend stocks, or so we thought — have dropped their payouts over the past year. Could the same thing happen to AbbVie?

There’s always that possibility, but the drugmaker’s dividend looks certain. Last year, AbbVie lost US patent exclusivity for its former crown jewel — the immunologic drug Humira. But it’s moving forward and delivering strong financial results, all things considered.

In the second quarter, AbbVie’s revenue rose 4.3% year over year to $14.5 billion. Top-line growth rates in the high single digits and low double digits are generally considered pretty good for big pharma companies. AbbVie is below, but let’s put things in context.

Humira is the best-selling drug in the industry’s history and is set to peak annual sales of $21.2 billion in 2022. It’s not uncommon for drugmakers to go through several years of declining revenue following major cliffhangers. patents. After just a year and a half of losing the biggest cash cow in the pharma world, AbbVie is already back to top-line growth. That’s impressive and says a lot about its core business.

Skyrizi and Rinvoq — the successors to AbbVie’s Humira — do much of the heavy lifting. Both are immunologic drugs, and the company expects their sales to continue to grow well into the 2030s. It also has several other growth drivers, not to mention a pipeline of dozens of ongoing programs .

AbbVie should be able to develop and commercialize new products to improve its lineup and circumvent future patent cliffs. The company’s business looks strong enough to sustain several dividend increases at a pace close to what it has been delivering since inception. This makes AbbVie a much better dividend stock than Novo Nordisk.