AbbVie: A Dividend Powerhouse in Transition

AbbVie Inc. (ABBV) has long been a cornerstone of dividend-focused portfolios, renowned for its consistent payouts and resilient healthcare sector positioning. However, the company now faces a pivotal transition as it navigates the post-Humira era. With its flagship drug Humira losing patent protection and biosimilars eroding revenue, AbbVie's ability to sustain its dividend hinges on the success of its newer therapies and pipeline innovations. This analysis evaluates the sustainability of AbbVie's dividend amid these challenges and explores whether its strategic pivot can secure long-term value for shareholders.

The Dividend Dilemma: High Payouts vs. Financial Resilience

AbbVie's dividend policy remains aggressive, with a 5.5% increase announced for February 2026, raising the annualized dividend to $6.56 per share. While this underscores the company's commitment to shareholder returns, the current dividend payout ratio of 493.2%-far exceeding the healthcare sector average of 35.2%-raises red flags. This metric, calculated by dividing the annual dividend by free cash flow (FCF), suggests that the dividend is not fully supported by operating cash flow.

Yet, AbbVie's FCF remains robust, generating $13 billion in the first nine months of 2025, with a payout ratio of 62.66% as of July 2025. While this ratio is slightly above its three-year average of 53.02%, it still indicates that the dividend is technically covered by FCF. Analysts caution that the high payout ratio, combined with a 22% annual EPS decline over the past five years, signals potential vulnerabilities as Humira's revenue continues to wane.

Post-Humira Transition: Skyrizi and Rinvoq as Successors

The expiration of Humira's U.S. patent in 2023 triggered a sharp revenue decline, with sales dropping 35% by year-end 2023. Biosimilars, now accounting for 36% of the U.S. market for Humira's indications, have accelerated this erosion. However, AbbVie's strategic response has been the rapid growth of its immunology portfolio, particularly Skyrizi and Rinvoq.

Skyrizi, a IL-23 inhibitor for psoriasis and Crohn's disease, generated $2 billion in Q1 2024 revenue-a 47.6% year-over-year increase-and is projected to reach $20 billion in sales by 2027. Rinvoq, a JAK inhibitor, contributed $1.1 billion in Q1 2024 sales, growing at 59.3% annually, with $11 billion expected by 2027. Together, these drugs surpassed $11.7 billion in 2023 revenue and are on track to outperform Humira's peak sales by 2027. Skyrizi's 35% market share in U.S. biologics for psoriasis and its pending approval for ulcerative colitis further solidify its growth trajectory.

Pipeline and Innovation: Fueling Future Growth

AbbVie's 2025 third-quarter results highlight the strength of its innovation-driven strategy. Adjusted diluted EPS of $1.86 exceeded guidance, driven by $4.708 billion in Skyrizi revenue and $2.184 billion for Rinvoq. The neuroscience portfolio, including Vraylar and Botox Therapeutic, also contributed $2.841 billion in Q3 2025, demonstrating diversification beyond immunology.

Looking ahead, AbbVie has raised its 2025 adjusted EPS guidance to $10.61–$10.65, reflecting confidence in its pipeline. Key catalysts include expanded indications for Rinvoq, new therapies in obesity and mood disorders, and a $195 million U.S. manufacturing facility to bolster production. Analysts from Morgan Stanley and Raymond James have raised price targets, citing these developments as critical to sustaining growth.

Risks and Analyst Projections: A Balancing Act

Despite these positives, AbbVie faces significant risks. Competitive pressures in immunology and neuroscience markets loom large, with rivals preparing to challenge Skyrizi and Rinvoq by 2026–2027. UBS analysts note that while Skyrizi and Rinvoq grew 46% and 34%, respectively, in Q3 2025, their exclusivity windows are narrowing, threatening margin stability. Additionally, the lack of specific revenue projections for obesity and mood disorder therapies introduces uncertainty.

However, AbbVie's R&D investments and strategic acquisitions, such as its $195 million manufacturing facility, signal a commitment to mitigating these risks. The company's updated 2027 sales forecast for Skyrizi and Rinvoq-$31 billion combined-reflects optimism about its ability to offset Humira's decline.

Conclusion: A Dividend Powerhouse in Flux

AbbVie's dividend sustainability rests on a delicate balance: its current FCF supports the payout, but the high payout ratio and reliance on Skyrizi and Rinvoq for future growth introduce volatility. While the company's pipeline and strategic investments position it to weather post-Humira challenges, investors must remain vigilant about competitive pressures and margin risks. For now, AbbVie's dividend appears secure, but its long-term viability will depend on the continued success of its newer therapies and its ability to innovate in a rapidly evolving healthcare landscape.