Is AbbVie a millionaire maker?

Large pharmaceutical stocks such as: AbbVie (ABBV -2.22%) It usually doesn’t rank high on the list of investors looking for opportunities to become millionaires. After all, they aren’t usually in the news for good reasons, and despite relying on the life-saving medicines they produce, most people don’t tell their peers about how their products will be used in every home or key helper in life. It’s kind of a huge global trend.

But as passionate investors know, sometimes the best opportunities go unnoticed. So, let’s take a moment to evaluate whether and under what conditions you could make millions by investing in AbbVie at the right time.

Owning AbbVie will probably make you a little richer.

AbbVie’s value proposition to investors is that it is a differentiated, top-performing pharmaceutical company with a knack for engaging in the right research and development (R&D) work to compete and win in the lucrative pharmaceutical market. And if AbbVie wins, it could be a big win, which could lead to big returns for shareholders over time. For example, try taking the drug Humira.

Humira treats a variety of conditions, from psoriasis to arthritis, ulcerative colitis, Crohn’s disease, and more. Although it is now available as a generic in many jurisdictions, it still generated a whopping $14.4 billion in sales in 2023. This represents a significant portion of the company’s 2023 peak of $54.3 billion.

With Humira’s market share rapidly being eroded by generic copies, new revenue streams to replace it are already coming online. In particular, management expects a pair of drugs, Rinvoq and Skyrizi, that treat the same disease, to generate more than $27 billion in annual sales by 2027. To achieve this, pharmaceutical companies will continue to do one thing they do particularly well: With Humira: We are conducting follow-up clinical trials to expand the approved indications of our already successful drug.

Between this year and next, management expects both Skyrizi and Rinvoq to pick up additional signs, respectively. During the same period, we will also collect results from the ongoing Phase 3 clinical trial for Rinvoq, which will set the stage for another 3 approved indications over the next few years. So, our efforts to continue to grow revenue from both products are well underway and we are seeing good results to date.

And that’s before even considering the rest of AbbVie’s pipeline output. In addition to Rinvoq and Skyrizi, the company could win eight more approvals by 2025. Therefore, there are many opportunities for short-term growth. Let us now look at the practical financial opportunities available to investors.

AbbVie’s forward dividend yield is currently 3.4%, which isn’t bad. More importantly, it has increased its dividend by 269% over the past 10 years. If you count the years until it was sprayed, Abbott Laboratories, which is Dividend King. This means the dividend has increased every year for at least 50 consecutive years. Therefore, the stock can reasonably be expected to provide patient investors with increasingly larger cash flows over time.

At the same time, management has a history of rewarding shareholders through share buybacks in addition to paying dividends. In 2023, the company purchased nearly $2 billion worth of stock. This is peanuts compared to the $12 billion spent in 2018.

We could see an encore of similarly sized repurchases once business picks up and it starts to burn more cash once again. And getting the capital back certainly helps make investors wealthier than they were before they bought the stocks.

This stock is not a lottery ticket

As you can probably guess from the size of its revenue base and dividend, AbbVie is not a business that will double in value in the next few years. If you are looking for an investment that will be the only investment you need to buy to go from rags to riches, this is not it and in fact, such an investment may not exist.

On the other hand, there are several ways that owning AbbVie stock could be a smart move for your financial health.

As a large pharmaceutical stock, the downside risk of the investment is fairly limited. Because they sell important medicines and will develop new ones no matter what. The stock will likely appreciate in value over time and will have a direct cut of cash flow from dividends. And if the stock can continue to perform strongly, it may even outperform the market.

So, is AbbVie a millionaire company? Not per se.

However, if you want to slowly become a millionaire through careful investing and financial management, making it a part of your portfolio is still a smart choice.