It was a volatile year for the markets, and the returns on the S&P 500 are flat to this day. This is good news for investors who feared the worst in March (a long-lasting market crash). However, 2020 was still a lousy year for many stocks. But two stocks were the exception: they outperformed the markets and paid dividends of 3% or more. Here are two pearls that you should now include in your portfolio.
AbbVie (WKN: A1J84E) is an even stronger, more diverse $ 63 billion health care share after the acquisition of botox maker Allergan. The company announced on May 8 that the transaction was final and called it a “turning point” that is now making it a stronger biopharmaceutical company. On the one hand, AbbVie enables it to diversify with a wider range of products. In addition, it also has the necessary “financial strength” to continue to be innovative and to invest in new products.
One of the newest drugs in AbbVie’s portfolio as a result of the acquisition is Ubrelvy migraine treatment. The drug was approved by the Food and Drug Administration at the end of last year. AbbVie will release its second quarter results on July 31, the first report since the Allergan deal was closed.
When the Illinois-based company released its first quarter results on May 1, net sales of $ 8.6 billion were more than 10% higher than a year earlier. The arthritis drug Humira made a significant contribution to this growth with a sales increase of 5.8% compared to the previous year. Skyrizi, a medication used to treat plaque psoriasis, was also involved. The drug contributed $ 300 million to sales in the first quarter. In the same period last year, this contribution to AbbVie’s sales was still zero.
The company’s net income was also very strong at $ 3 billion, up 23% year over year. AbbVie has been performing well lately and the acquisition of Allergan only makes the company a better buy in the long run.
The stock is up about 11% year over year and is currently paying a quarterly dividend of $ 1.18. This results in an annual return of 4.8%, which is significantly higher than the S&P 500 average of 2%. The stock is also a dividend aristocrat, as it has increased its dividend payments for more than 25 years in a row, even when it was still part of Abbott Labs.
2. General Mills
General Mills (WKN: 853862) is another top share that is doing well this year. With an increase of over 21%, it clearly beat both the S&P 500 and the AbbVie. The packaged food company is thriving in the midst of the COVID 19 pandemic. This is because consumers stock up on essentials to prepare meals at home.
On July 1, the Minnesota-based company released its full-year results for the 2020 financial year. While net sales for the full year increased by only 5%, the fourth quarter was an astonishing 21% higher than in the same period last year. According to the company, this development is due to the pandemic and “a significant increase in the demand for food at home”.
Operating income increased 16% in the quarter, in line with a 17% increase for General Mills for the full year. In the previous year, however, the company’s operating profit only increased by 4%.
General Mills pays a dividend of $ 0.49 quarterly, which gives a return of just over 3% per year. The last time the company increased its payouts was in 2017.
Which stock is the better buy today?
It may be tempting to take a look at General Mills’ stock, see a high performer, and jump on the train.
However, investors should keep in mind that 2020 is an unusual year due to the COVID 19 pandemic. When the pandemic is over, people are likely to revert to their old habits. This includes eating out and less meals at home. Steady double-digit sales growth is simply not a realistic expectation that General Mills investors should have. The last year in which the company achieved such sales growth was the 2012 financial year when sales increased 12% over the previous year.
With the addition of Allergan, AbbVie appears to be better able to achieve more sustainable sales growth in the coming years. The company now has a broader portfolio of medications to work with. And with a higher dividend yield, it offers investors the best mix of possible sales growth and recurring income.
The post 2 striking dividend stocks with above-average payouts appeared first on The Motley Fool Germany.
David Jagielski does not own any of the stocks mentioned. The Motley Fool does not own any of the stocks mentioned.
This article was written by David Jagielski in English and was on July 25th, 2020 on Fool.com released. It has been translated so that our German readers can take part in the discussion.
Motley Fool Deutschland 2020