This week’s Alpha Algorithm hones in on yet another steady-dividend-paying stock, typical of the stocks that have been outperforming the broader stock market in this range-bound year. The stock’s pullback over the past few days offers a particularly good entry point.
Incorporated in 2012 and based in North Chicago, Illinois, AbbVie Inc. (ABBV) is one of the nation’s largest pharmaceutical companies. The company’s three most important drugs on the market today are Humira (rheumatoid arthritis), Imbruvica (cancer) and Viekira Pak (Hepatitis C).
AbbVie started its corporate life as a spin-off of Abbott Laboratories (ABT), whose dividend history is included in AbbVie’s for the purposes of the Alpha Algorithm strategies.
AbbVie Inc. (ABBV) vs. the S&P 500 YTD
Six Top Investment Strategies Betting on AbbVie Inc. (ABBV)
- Dividend Aristocrat
The stock is among those in the S&P 500 that have increased dividends for at least 25 consecutive years.
- Dividend Dogs
One of the five highest-yielding stocks among each of the 10 sectors tracked in the S&P 500.
- High and Steady Dividend
The stock is one of 50 dividend-paying companies from the S&P 1,500 Composite Index that has increased dividends for at least 20 consecutive years.
- Small-Cap/Value Tilt
Selected using a multi-factor modeling approach, the stock is a smaller-cap or value stock designed to enhance portfolio risk/return characteristics.
- IPO Index
This strategy tracks a market-cap-weighted index of the 100 largest U.S. initial public offerings (IPOs) over the first 1,000 trading days of each stock. Stocks must pass additional quantitative screens as well.
- Spin-Offs
The company has spun away from its parent firm in the last four years. Spin-offs have a solid history of outperforming the broader market.
Recommendation
Buy AbbVie Inc. (ABBV) at market today. Place your initial stop at $54.
Options
With the stock currently in a technical correction. I am holding off on recommending options this week.
Portfolio Update
With the Autozone (AZO) stock now included in only three of the original seven Alpha Algorithm strategies, it is time to say good-bye to this position at a slight loss of 2.13%. Remember to sell your related option positions as well.
Sincerely,
