2 Top Dividend Stocks That Could Set You Up for Life
With equity markets in shambles due to President Donald Trump's trade policies, now might be as good a time as any to invest in excellent dividend stocks.
For one, dividend-paying companies tend to be more resilient than their non-dividend-paying peers. They are more likely to emerge from challenging economic periods in one piece. Second, their regular payouts can help smooth out losses during a downturn. That's precisely what some investors are looking for in this uncertain environment.
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With that said, let's consider two top dividend stocks that should navigate the current storm relatively well and continue performing long after: AbbVie (NYSE: ABBV) and Gilead Sciences (NASDAQ: GILD).
1. AbbVie
AbbVie went public in 2013, splitting from its former parent company, Abbott Laboratories. Since then, the drugmaker has produced market-beating returns.
ABBV Total Return Level data by YCharts
More importantly, the stock has the qualities of a forever investment. AbbVie consistently develops newer medicines to replace older, off-patent ones. It recently successfully navigated the most significant patent cliff in the history of the pharmaceutical industry. The company's rheumatoid arthritis drug Humira, the most lucrative therapy ever, lost U.S. patent exclusivity in early 2023. AbbVie returned to top-line growth last year, and investors can expect it to maintain that momentum.
The drugmaker expects its two immunology superstars, Skyrizi and Rinvoq, to generate about $31 billion in sales by 2027 (they should rack up about $24 billion this year). Humira's sales peaked at $21.2 billion. Further, Skyrizi and Rinvoq should continue their northbound trajectory well into the next decade. These two medicines are more than filling Humira's shoes.
They will eventually run out of patent protection, but AbbVie can handle the most serious patent cliffs as it did with Humira. The company does have other growth drivers -- including its Botox franchise -- not to mention a deep pipeline.
What about its dividend? When counting the time it spent under Abbott Laboratories, AbbVie has increased its payouts for 53 consecutive years. It's not like the drugmaker has been slacking off since 2013, either; its payouts have grown by 310% since its IPO. The stock offers a juicy forward yield of 3.5% and a reasonable cash payout ratio of just under 62%.
AbbVie looks like a fantastic dividend stock to buy and hold for a long time.
2. Gilead Sciences
Gilead Sciences is a leading biotech company that develops products across several therapeutic areas. The company is best known for its work in the HIV drug market, where it is arguably the leader. Last year, Gilead's Biktarvy -- the top-selling HIV regimen in the U.S. -- generated $13.4 billion in sales, 13% higher than the previous fiscal year. Descovy, used for the treatment and prevention of HIV (a leader in the PrEP niche) racked up $2.1 billion in sales, an increase of 6%.
Some might argue that Gilead Sciences is too dependent on its HIV portfolio, which recorded total revenue of $19.6 billion last year, up 8% year over year. The biotech's top line grew 6% to $28.8 billion in 2024. However, the company has been ramping up other parts of its business. Its oncology and liver disease units have grown faster in recent quarters, though they still make up a relatively small portion of its revenue compared to HIV. These other segments should grow in prominence in the coming years.
Gilead Sciences' pipeline features about 30 oncology clinical trials, including several phase 3 studies. And while Veklury -- Gilead Sciences' coronavirus medicine -- had a negative impact on its revenue growth in 2024, the medicine hardly features in the drugmaker's long-term growth plans. Veklury's sales have fluctuated significantly in the past few years.
However, its core franchises -- HIV, oncology, and liver disease -- have slowly and steadily moved in the right direction. In the long run, the company should significantly expand its lineup and continue delivering strong financial results.
Lastly, Gilead Sciences has an attractive dividend track record. The company has increased its payouts by almost 84% in the past 10 years. Its forward yield of 3% and cash payout ratio of 38% look competitive. Income-seeking investors can safely add this stock to their portfolios for good.
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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, Abbott Laboratories, and Gilead Sciences. The Motley Fool has a disclosure policy.