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Four Dividend Champions On Sale

VF Corp (NYSE:VFC) engages in the design, production, procurement, marketing, and distribution of branded lifestyle apparel, footwear, and related products in the United States and Europe. The company raised its quarterly dividend by 13.50% to 42 cents/share.

This marked the 44th consecutive annual dividend increase for this dividend champion. Over the past decade, VF Corp (NYSE:VFC) has managed to raise dividends at an average annual rate of 17.10%/year. Currently, the stock looks attractively valued at 17 times forward earnings and yields 3.10%.

The company has transformed itself into a designer and marketer of casual lifestyle brands in the US. The company focuses on its Outdoor & Action sports, Sportswear and Contemporary brands lifestyle businesses. Increasingly, I see many people wearing jackets with the “North Face” logo, either at work or in the streets. Another growth factor could be expansion into international markets, as well as strategic shifting of focus to more profitable brands. The company has a history of making acquisitions work, as evidenced by Vans and North Face deals in the early 2000s. The company delivers a quality product at an attractive price point for consumers.

VF Corp (NYSE:VFC) (3) has had a strong track record of growing sales, making acquisitions work, and earning more in order to grow the dividend to shareholders.

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AbbVie Inc (NYSE:ABBV) discovers, develops, manufactures, and sells pharmaceutical products worldwide. It was formed in 2013, as a result of the spin-off from the legacy Abbott Laboratories. I believe that both the new Abbott Laboratories (NYSE:ABT) and Abbvie should get credit for the long track record of annual dividend increases from the legacy Abbott. This view is further strengthened by the fact that both spin-offs have kept up the tradition of annual dividend increases. Abbvie recently raised its quarterly dividend by 12.30% to 64 cents/share. The stock is attractively valued at 12 times expected earnings and a dividend yield of 4.40%.

The biggest risk with AbbVie Inc (NYSE:ABBV) is that the drug Humira that treats rheumatoid arthritis accounts for 64% of revenues, which is very high. This drug is coming off patent protection in the US at the end of 2016 and Europe in 2018. The company claims that due to the biosimilar structure of the drug, and the patents surrounding it, it would be difficult to replicate by competitors until the early 2020s. Management has indicated that they would try to maintain exclusivity of Humira until 2022. The company also has promising new drugs in the pipelines. Two other growing drugs include Imbruvica and Viekira, but they account for less than 16% of sales.

The nice thing is that Abbvie is also diversifying its product base by acquisitions. In 2015 it acquired Pharmacyclics, and bought the drug Imbruvica. The sales of this drug are expected to grow from $1.30 billion in 2015 to $5 billion by 2020. Abbvie also closed an acquisition of Stemcentrix, which has several compounds in trials. In general, the company expects double digit growth in earnings per share through 2020, fueled by introduction of 20 new compounds (which are in phase 2 and 3), and protecting its sales of Humira. Depending on how things unfold over the next decade, AbbVie Inc (NYSE:ABBV) could either look like a steal today or a value trap.

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