Forget Johnson & Johnson, AbbVie Is a Better Dividend Stock

Dividend stocks are great for long-term investors who want to sit back and watch secondary income accumulate. Dividend investing can be a great way to supplement returns, especially over longer periods of time once you've accumulated a nice number of paying stocks in your portfolio. In the midst of the biggest recession since 2008, it's more important than ever to load up on safe and reliable stocks that will stand the test of time. A dividend is just one signal of a company's longevity and future value.

One healthcare stock that dividend investors gravitate toward is Johnson & Johnson (NYSE: JNJ). The big-name drugmaker pays a decent and regular yield: It's been growing payouts for decades and its drug pipeline and consumer goods businesses are solid. But perhaps there's an even better option for dividend investors in pharmaceutical company AbbVie (NYSE: ABBV). Here's why:

Today, J&J pays its shareholders a quarterly dividend of $1.01 for an annual yield of 2.6%, which is well above the S&P 500 average of 2%. AbbVie, however, pays a quarterly dividend of $1.18, which annually yields over 5% at current share prices. This is significantly higher than J&J's yield, such that if you were to invest $10,000 in both stocks, AbbVie's annual payouts would be $240 higher. Even if you factor in each company's historical dividend growth, that gap isn't likely to narrow.

Source Fool.com