Undervalued Dividend Stock

One of my favorite dividend growth stocks is $ABBV

The company owns the #1 selling drug in the world, Humira, which has US patent protection into 2023

This year, the company closed on its acquisition of Botox inventor Allergan

The company maintains not only a trong portfolio of current products, but also has a strong line of up and coming products and a VERY strong pipeline

3 top selling drugs include the following + Q2 revenues:

Humira $4.8B
Imbruvica $1.3B (produced with $JNJ)
Skyrizi $330M

The Allergan acquisition is huge because it expands and diversifies the company's portfolio, which was management's goal with the acquisition knowing Humira was losing patent protection in 2023

However, many of $ABBV drugs, including Imbruvica, have been growing at a strong clip

Imbruvica grew sales 17% in Q2

The company is still trading at very cheap levels and the recent declines is giving investors another opportunity to pick up shares of this pharma stock

2021 EPS estimates are $12.24
2022 EPS estimates are $13.61

Those estimates equate to a Fwd P/E of 7.7x in 2021 and 6.9x in 2022. Those are ABSURDLY low valuations

Over the past 5yrs, shares of $ABBV have traded at a P/E of 13.9x

Dividend Yield of 5.0%
5yr Avg Div Yield of 3.9%

Payout Ratio = 51%
FCF Payout Ratio = 60%

5yr Avg Dividend Growth = 21% per year

Plenty of room from a cash flow perspective to continue raising the dividend at a strong clip

Looking at the current chart the stock trades at an RSI of 45

Next support level is $92, after that $89

Resistance level is $98

$ABBV is a stock that can provide long-term investors both stock upside and strong dividend growth

Cash flows should continue to rise and the synergies take shape as they implement Allergan fully into their ecosystem

I rate $ABBV a BUY

Disclaimer: This is not financial advice*