Why Dividend Kings Like AbbVie and Johnson & Johnson Are Outperforming the Market in 2025

In an economic landscape marked by volatility and shifting market dynamics, dividend-paying stocks have emerged as a beacon of stability for income-focused investors. As of 2025, two pharmaceutical giants-AbbVie (ABBV) and Johnson & Johnson (JNJ)-stand out not only for their robust year-to-date (YTD) stock performance but also for their unwavering commitment to dividend growth and resilient business models. With the S&P 500 returning 16.45% YTD and the NASDAQ Composite at 17.93%, both ABBV and JNJ have outperformed these benchmarks, delivering 21.31% and 26.14% YTD returns, respectively. This analysis explores why these Dividend Kings are capturing investor attention in 2025, focusing on their earnings resilience, dividend growth trajectories, and strategic adaptability in a competitive sector.

A Legacy of Dividend Growth and Analyst Confidence

AbbVie and Johnson & Johnson have long been staples of the dividend growth investor's portfolio. AbbVie, which has raised its dividend for 12 consecutive years since its spinoff from Abbott in 2013, now pays $6.92 per share annually, reflecting a 5.5% increase in 2025. Analysts project this trend to continue, with a 5% to 6% annual dividend growth rate expected over the next few years. Meanwhile, Johnson & Johnson, a Dividend King with a 62-year streak of consecutive increases, maintains a $5.08 annual payout in 2025. Over the past five years, its dividend has grown by 31%, underscoring its conservative yet reliable approach to shareholder returns.

Both stocks carry a "Moderate Buy" rating from analysts, with 28 and 25 analysts covering ABBV and JNJ, respectively. AbbVie's potential for 5% to 6% annual dividend growth aligns with its strong earnings momentum, while Johnson & Johnson's 11.5% projected upside reflects confidence in its diversified business model and conservative payout ratio. These ratings highlight the market's recognition of their ability to sustain income generation even amid macroeconomic headwinds.

Earnings Resilience in a Challenging Sector

The pharmaceutical industry is no stranger to challenges, from patent expirations to biosimilar competition. Yet, both AbbVie and Johnson & Johnson have demonstrated remarkable earnings resilience. In Q3 2025, AbbVie reported revenue of $15.8 billion, a 9.1% year-over-year increase, driven by blockbuster drugs Skyrizi and Rinvoq, which generated $6.9 billion in combined sales. This performance prompted the company to raise its 2025 revenue forecast to $60.9 billion. Similarly, Johnson & Johnson posted $24 billion in Q3 revenue, a 6.8% increase, with its Innovative Medicine segment poised for 5-7% growth through 2030, fueled by therapies like Darzalex and Carvykti.

Analyst expectations further reinforce this momentum. AbbVie is projected to see a 6.4% year-over-year sales increase and a 21.2% earnings-per-share (EPS) growth in 2025, while Johnson & Johnson is forecasted to achieve 2.7% sales growth and 6.2% EPS growth according to financial analysts. These figures outpace the sector average and underscore the companies' ability to navigate patent cliffs and competitive pressures through innovation and strategic acquisitions.

Strategic Diversification and Operational Excellence

The outperformance of ABBV and JNJ is not accidental but rooted in their strategic business models. Johnson & Johnson's diversified portfolio spans immunology, oncology, neuroscience, and medical devices, allowing it to mitigate risks from any single product line. For instance, while Stelara faces biosimilar competition, its Innovative Medicine segment is expanding through newer therapies like Tecvayli. Additionally, J&J's $55 billion investment in U.S. R&D and manufacturing over four years positions it to maintain its innovation edge.

AbbVie, meanwhile, has transformed its portfolio post-Humira. The company's focus on immunology (Skyrizi, Rinvoq) and neuroscience (Vraylar, Emrys) has offset the loss of exclusivity for its flagship drug. Strategic acquisitions, such as those in oncology and neuroscience, have further strengthened its pipeline. Despite near-term challenges like biosimilar erosion for Humira and competitive pressures in Imbruvica, AbbVie's operational efficiency and product diversification ensure long-term stability.

A Compelling Case for Income Investors

For investors prioritizing income generation and capital preservation, AbbVie and Johnson & Johnson offer a rare combination of high-quality dividends, earnings resilience, and strategic adaptability. Their YTD outperformance against broad-market indices and their ability to maintain dividend growth in a challenging sector make them attractive in 2025. Moreover, their business models-rooted in diversification, innovation, and conservative financial management-position them to weather economic cycles and deliver consistent returns.

While no investment is without risk, the pharmaceutical sector's defensive characteristics, coupled with these companies' track records, make them standout choices for those seeking stability and growth in uncertain times. As the market continues to evolve, AbbVie and Johnson & Johnson exemplify how disciplined, long-term strategies can create value for shareholders across generations.