Billionaire Ken Griffin Is Buying This Dividend King That Wall Street Still Rates a Buy
Key Points
AbbVie has increased its annual dividend for five decades.
The company has several blockbuster drugs as well as a robust pipeline.
Billionaire Ken Griffin's Citadel Advisors has been increasing its stake in drugmaker AbbVie (NYSE: ABBV) in recent months.
In the second quarter, Citadel purchased 2.7 million shares of AbbVie at an average price of $234.57, for a total investment of about $633 million. That takes Citadel's stake in AbbVie to 3.2 million shares, worth $909 million at the current share price of about $284.
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With $571 billion in assets under management, Citadel is the world's largest hedge fund and one of the most successful. So, it's always worth watching what stocks and other assets it is accumulating.
Some investors might question investing in AbbVie at this time, however, since the stock's run-up this year -- about 24% -- has made it somewhat expensive. It's trading at 74 times trailing earnings.
Yet I think it's a great investment, for a couple of reasons.
First, don't forget that AbbVie is a Dividend King, which means it's among an elite group of companies that have raised their annual dividend for 50 consecutive years. Right now, AbbVie's annual dividend is $6.92 per share, which puts its dividend yield at 2.43%.
AbbVie has a successful drug pipeline
And second, AbbVie has brought to market many blockbuster drugs, including Skyrizi for psoriasis, Rinvoq for arthritis and other ailments, Humira for inflammation and autoimmune diseases, and Botox for cosmetic treatments as well as skin and muscle conditions.
Yet despite those successes, the company is not resting on its laurels. In recent years, it has focused intently on broadening and deepening its drug pipeline. As a result, today it has some 90 drugs and other treatments in development, two-thirds of which are in late-stage clinical trials.
Image source: Getty Images.
In September, the company got a huge win from the U.S. Food and Drug Administration (FDA), which approved its drug called Juvmo, a once-daily pill to treat Parkinson's disease. The drug is the product of AbbVie's 2024 acquisition of Cerevel Therapeutics, which specializes in neuroscience treatments. Analysts at William Blair said they expect Juvmo's sales to grow to as much as $1.4 billion annually by 2040.
And Griffin is not the only investor bullish on AbbVie. Of the 30 analysts who cover AbbVie and are tracked by Yahoo Finance, 24 rate the stock a "strong buy" or a "buy."
I think these analysts see the potential upside in the stock due to its strong current brands and robust pipeline, together with other tailwinds for pharmaceutical firms, including an aging population needing to spend more on healthcare. This stock is definitely worth a look for investors seeking both share price upside and income.
Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie. The Motley Fool has a disclosure policy.