Two Straightforward Dividend Shares to Acquire with a $250 Investment in 2025
Dividend investing offers two primary paths: chasing high-yield stocks or tracking companies with rapidly rising payouts, although ultrahigh yields often signal potential concerns. However, AbbVie (ABBV) and W.P. Carey (WPC) present a compelling case, marrying the benefits of both worlds.
1. AbbVie: A Biopharma Dream
Putting off the decision between high yield and rapid growth, AbbVie remains an alluring choice. As a spin-off from Abbott Laboratories in 2013, this biopharmaceutical giant's dividend payouts have skyrocketed by 310%. Offering a tantalizing 3.6% yield, AbbVie is not what one might expect from a rapidly dividend-growing stock.
Recent events like an $8.7 billion investment in Cerevel Therapeutics haven't fared well, with failures in schizophrenia trials dampening investor sentiment. However, lending optimism is Cerevel's successful Parkinson's drug trial. Tavapadon, the potential treatment, has shown promising results, setting the stage for substantial revenue inflows in the future.
Should a new Parkinson's disease drug not materialize, AbbVie's financial health remains robust. Skyrizi, a psoriasis medication launched in 2019, has steadily dominated the market, accounting for $7.9 billion in sales during the first nine months of 2024. Rinvoq, another Maladies-related drug, has also boosted revenues, contributing $4.1 billion to AbbVie during the same time frame.
AbbVie's financial prowess enabled it to generate an impressive $15.6 billion in free cash flow during 2024, making more than enough to meet its dividend obligations. With the upcoming revenue potential from Skyrizi, Rinvoq, and hopefully, Tavapadon, AbbVie's dividends seem likely to enjoy significant growth in the foreseeable future.
2. W.P. Carey: The Diversified Dividend Star
W.P. Carey is an REIT that excels in consolidating rent from various businesses with long-term net leases. Boasting a substantial 6.4% dividend yield at recent prices, income-focused investors have long flocked to this attractive asset.
The asset's recent difficult decisions to spin off its office building portfolio and lower its dividend payout might have influenced its stock price, but these aspects aren't major concerns for dividend-focused investors. Likewise, a 2024 profit slump and a 2023 dividend cut have been a temporary setback, with a strong rebound expected from the REIT's extensive portfolio and long lease terms.
The stability of W.P. Carey's portfolio is rooted in its largest tenant, Extra Space Storage, which accounts for only 2.7% of the REIT's annual base rent. This diversity helps shield W.P. Carey from economic downturns.
Promisingly, the REIT has already raised its dividend payout four times since its 2023 cut, with plenty of room for more growth. Amid expectations of $4.68 in adjusted funds from operations, following the midpoint of its projected range, the dividend payout of $3.52 seems comfortably secure. This steady climb in divids makes W.P. Carey an appealing inclusion for income-focused investors aiming to boost their passive income streams.
- Regarding investing strategies, some individuals might opt for riskier ultrahigh dividend stocks in search of higher returns. However, this approach tends to reflect potential issues, as yields above 10% often signal potential red flags.
- Looking towards 2025, both AbbVie and W.P. Carey present appealing opportunities for investors seeking balanced growth and income through their dividend payouts. While AbbVie's robust financials and exciting drug pipeline offer potential for high dividend growth, W.P. Carey's diversified portfolio and strong lease agreements promise steady income.
