AbbVie Inc. (NYSE:ABBV) is one of my top eight U.S. stock picks for February available through my premium service. AbbVie offers a high dividend yield and above-average dividend growth.
Among the eight top picks, there are two high, safe yield ideas, three high-growth ideas, and two value ideas. Seven other great companies were also considered but didn’t make the list; I briefly talked about them in the premium service including their growth prospects and entry points.
Here’s Morningstar’s business overview on AbbVie:
“AbbVie is a pharmaceutical company with a strong exposure to immunology and oncology. The company’s top drug, Humira, represents over half of the firm’s current profits. The company was spun off from Abbott in early 2013.”
AbbVie offers a nice yield of 4.1%. However, it is a riskier stock because of its reliance on Humira. Moreover, it is highly leveraged.
I’ll compare AbbVie with a safer company like Pfizer (NYSE:PFE) as an example.
In the latest quarter, AbbVie had a financial leverage of 10.3 while Pfizer’s was 2.82. So, AbbVie has higher debt levels in an attempt to drive higher growth.
Indeed, AbbVie has posted high returns on equity since 2013.
Because AbbVie has relatively high debt levels, it makes it all the more important that it has strong liquidity ratios. Indeed, its liquidity ratios look alright. In the latest quarter, its current ratio was 1.79 and its quick ratio was 1.42. Comparatively, Pfizer had lower ratios of 1.11 and 0.78, respectively, as it has lower leverage.