PDL BioPharma Inc. (PDLI), AbbVie Inc (ABBV): Two Scariest Dividend Stocks in Health Care

That leaves one final late-stage drug to consider: AbbVie Inc (NYSE:ABBV)’s hepatitis C combo. This drug combo boasts the greatest potential of all, with some analysts estimating $3 billion in annual sales. However, the company has plenty of competition in the hep-C market. The fast-paced development created by this rivalry has already thwarted projected sales for other drugs.

For example, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) was on cloud nine back in 2011. Analysts predicted that its hepatitis C drug Incivek would hit peak sales of $5 billion. Fast-forward the clock to today. Incivek’s sales for 2012 were $1.6 billion, but they’re now dropping. Physicians and patients aren’t going with the drug in anticipation of the next great thing. This same scenario could play out for AbbVie.

Even if we assume that AbbVie Inc (NYSE:ABBV) hits the jackpot with all of these drugs, the grand total comes to $6 billion. That’s still 50% less than Humira’s current annual revenue. The company still would need to pull a few rabbits out of the hat to avoid declining revenue.

AbbVie’s 3.6% dividend and super-low 10% payout ratio look great right now and will probably continue to look attractive as long as Humira keeps rolling. However, even great dividend payments wouldn’t be enough to compensate for share decreases in the event of any significant hiccups in the company’s pipeline.

Bottom line
Should prospects for the future scare off investors from these stocks now? Not necessarily. Both companies are highly likely to keep paying solid dividends for at least the next couple of years. Both will probably hold their values pretty well for a while also.

The dangers come more into play as PDL BioPharma Inc. (NASDAQ:PDLI) and AbbVie Inc (NYSE:ABBV) get closer to losing their important patents. Both companies’ fortunes hinge on replacing revenue. Failure to do will be quite frightening for these two health-care dividend stocks.

The article 2 Scariest Dividend Stocks in Health Care originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Vertex Pharmaceuticals.

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