Abbvie (stock ticker: ABBV) is one of such stocks. I already have a half position in Abbvie which I started back in November of last year, just before the elections. I briefly talked about it back then in this article: Are your investments election ready?
Today ABBV took a nice 3.5+% price dip. I was able to pick up some shares at $61.0 just around 2pm (EST). I would have done slightly better if I had bought it a bit earlier. Oh well it's hard to time the dip perfectly, but still I was able to pick up these shares deep in the dip and before the stock started to climb back out a bit.
I like to buy all my stocks in 25% increments of a full position. I already own half a position in ABBV and have been waiting patiently to add more on dips.
Despite the entire pharma/biotech sector under pressure due to pressure on drug prices by the new administration, the stock has still done quite well since elections. As of yesterday (prior to this dip), my capital return on existing ABBV position was around 10%. That's a pretty good return in two months. Even after today's dip, I am still up around 6%.
Today's 3.5% - 4% dip was quite nice as it gave me a yield-on-cost (YOC) of 4.2%. I am quite happy anytime I can pick some shares in a quality company (especially a dividend aristocrat) at 4+% yield.
With this latest purchase, I am now at 75% of my full position. I'll add the last 25% on any additional dips or after earnings report. Though, I may not see another dip as Abbvie is expected to report strong earnings and as a result stock should go up long-term.
Abbvie is also one of the fastest growing pharma companies and forecasted to grow at the annual rate of 14% and 17% in 2017 and 2018, respectively.
Copyright 2017, F.A.S.T Graphs - All Rights Reserved www.fastgraphs.com
Company also recently announced a dividend increase of 12% for 2017. This is generous increase and representative of strong earnings and cash flow. Dividend is nicely covered on both earnings and FCF basis (payout ratio 49%) and I expect similar dividend growth to continue into the near future.
ABBV is currently trading at below fair valuation (FG P/E of 13) which makes it even more attractive to a value investor like myself.
I will be buying more of ABBV on any further weakness or dips to get to my full position while keeping my YOC above 4%.
Thanks for reading and hope you enjoyed the quick summary on my purchase today. As always, I am interested in hearing from my readers.
Disclaimer: I own shares of Abbvie.
Author of this article is not a licensed/registered financial or investment advisor and does not provide investment advice. Any mention of stock names in this article or website is not a recommendation to buy. This article is for informational purpose only. Full disclaimer can be read here: Full Disclaimer