I know many investors are reluctant to chase stocks that have had good runs. However, I don’t mind chasing if the merchandise is still cheaply priced, explains Chuck Carlson, dividend reinvestment expert and editor of DRIP Investor.

AbbVie (ABBV) is such a stock. Indeed, the stock of this pharmaceutical giant has moved sharply higher since bottoming at $62 per share in 2020.

Recent price action has been impressive, with these shares posting a series of new highs. That kind of strength would normally give me pause. However, AbbVie still trades at just 11 times its 2022 earnings estimate of $14.18 per share. And the stock’s dividend yield of 3.6% is more than double the yield of the S&P 500 Index.

To be sure, AbbVie faces some challenges over the next 18 months. Its biggest seller, Humira, goes off U.S. patent in 2023, which will likely lead to a near-term earnings decline.

However, AbbVie has done a good job of developing drugs that can take up the slack, and the company’s pipeline is impressive. I think the earnings slowdown is already baked into the stock and view these shares as a solid growth-and-income play in the pharmaceutical sector.

A big part of AbbVie’s success has been driven by Humira, the world’s best-selling drug. In fact, the perception on Wall Street for the longest time (and one that I hold) was that the company was truly a “one-trick” pony, and such companies tend to get trashed when the good times stop for that one drug.

Humira accounted for roughly 36% of the company’s revenue in the fourth quarter. However, AbbVie will be forced to reduce its dependency on Humira in 2023 when the drug’s U.S. patent expires.

The good news is that AbbVie has been seeing good growth in other drugs. For example, Skyrizi and Rinvoq are positioned to generate big sales over the next several years. Indeed, AbbVie expects each of these drugs to deliver sales of greater than $7.5 billion in 2025. For comparison, Humira’s sales for all of 2021 were nearly $21 billion.

Another source of revenue growth will come from products brought on by the company’s 2020 acquisition of Allergan. A big product here is Botox, perhaps best know for eliminating wrinkles but also used to prevent chronic migraines.

The company’s product pipeline is rather comprehensive, with the company working on new drugs in the immunology, neuroscience, oncology, virology, aesthetics, and eyecare markets.

AbbVie should put up good numbers in 2022. Per-share profits should rise at least 12%, with revenues growing nearly 8%. The top and bottom lines will likely dip in 2023 as a result of Humira’s U.S. patent expiration, but growth should resume in 2024.

The strong earnings performance provides good coverage of the dividend, which is currently annualized at $5.64 per share. The dividend was recently boosted 8.5%. In a volatile market environment, AbbVie should see continued investor support. Please note AbbVie offers a direct-purchase plan. Minimum initial investment is $250.

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