The stories for these great dividend stocks are better than many might think.
Sometimes, misperceptions can work in investors' favor. When others think the outlook for a stock isn't so great, you can win big if that view is overly pessimistic.
Several stocks that pay fantastic dividends are in that category. Here are three dividend stocks to double up on right now.
1. AbbVie
AbbVie's (ABBV -1.01%) top-selling drug Humira is past its prime. Sales continue to tank as it faces biosimilar competition.
The company's overall revenue is barely growing. AbbVie's adjusted earnings per share (EPS) fell year over year in the first quarter of 2024. This might not sound like a good stock to buy, but there's more to the story.
Robust growth is likely right around the corner for AbbVie. Sales for the company's two successors to Humira -- Skyrizi and Rinvoq -- are skyrocketing. Migraine therapies Ubrelvy and Qulipta continue to gain momentum. AbbVie's oncology lineup looks solid with Venclexta and newer cancer drugs Elahere and Epkinly.
Rob Michael, AbbVie's president and COO who's set to become CEO in July, said in the company's Q1 earnings call that AbbVie remains "well-positioned to deliver a high-single-digit revenue CAGR [compound annual growth rate] through the end of the decade." AbbVie's board voted unanimously for Michael to replace longtime CEO Rick Gonzalez, who will become executive chairman.
Income investors should love AbbVie's forward dividend yield of nearly 4%. The company is a Dividend King, with 52 consecutive years of dividend increases. I fully expect AbbVie's dividend to continue growing for a long time.
2. Chevron
Climate-change concerns are driving a shift from fossil fuels to renewable energy sources. Big oil companies like Chevron (CVX -0.87%) face an existential threat. Or do they?
Chevron's production rose 12% year over year in Q1. The company projects more upstream growth through at least 2027.
It's also investing in several major projects that will boost capacity. One industry executive forecasts an oil supply shortage by late 2025. Chevron is poised to benefit tremendously if this prediction is right.
At the same time, Chevron is hedging its bets. It plans to reduce its use of carbon dioxide in upstream production by 35% within the next four years. The company is pouring money into hydrogen, renewable fuels, and carbon capture technology, and the latter could eventually make it possible to produce and use oil and gas without any significant environmental impact.
Chevron remains a favorite for income investors with its dividend yield of 4.1%. It has increased the dividend payout for 37 consecutive years, and I look for this streak to continue.
Investors should also benefit from the "invisible dividends" of stock buybacks. Chevron plans to resume share repurchases of around $17.5 billion per year now that Hessshareholders have voted in favor of an acquisition by the oil and gas giant.
3. Pfizer
Once-booming COVID-19 vaccine sales have plunged, dragging down Pfizer's (PFE) overall revenue and earnings. The big drugmaker faces a looming patent cliff with multiple blockbuster drugs losing patent exclusivity over the next few years. The company might seem like a stock to avoid like the plague, but I think it's a great stock to buy.
Sure, Pfizer has some major obstacles to overcome. However, the company also has a solid plan in place. More importantly, it has solid products in place. Pfizer projects that its new products (and newly approved indications for existing products) should generate enough additional revenue to offset the negative impact of the patent cliff, and then some.
The biopharma company has also used a lot of the cash made when COVID-19 was a more serious concern to gobble up smaller drugmakers. Since 2022, Pfizer has acquired Arena, Biohaven, Global Blood Therapeutics, ReViral, and Seagen. These and other deals on the way could add roughly $25 billion in new annual revenue by 2030.
While investors wait for Pfizer to return to growth, the company pays a juicy forward dividend yield of over 5.9%. Pfizer reaffirmed in its Q1 update that it intends to maintain and grow its dividend as it pays down debt and reinvests in the business.
Keith Speights has positions in AbbVie, Chevron, and Pfizer. The Motley Fool has positions in and recommends Chevron and Pfizer. The Motley Fool has a disclosure policy.
