These 2 Dividend Stocks Are Absolute Bargains Right Now

Dividend stocks are great for many reasons, not least because any company that can sustain growing payouts for a long time likely has a strong underlying business. It's even better to invest in excellent income stocks when they seem to be trading at attractive valuations, which isn't always easy to find since such corporations are in high demand.

Thankfully, there are such stocks on the market, and below are two examples: AbbVie (NYSE: ABBV) and Gilead Sciences (NASDAQ: GILD). Here's the rundown.

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1. AbbVie

The past couple of years have been tumultuous for AbbVie. The company lost patent exclusivity for its best-selling drug, Humira, in early 2023, initially leading to a massive drop in revenue, earnings, and share price. While it had managed to rebound from that setback, AbbVie's shares fell off a cliff late last year when one of its exciting pipeline candidates, emraclidine (a potential schizophrenia medicine), failed phase 2 studies.

The drugmaker has also recouped much of the losses from that debacle, but its shares remain fairly valued, at least according to one of the most popular valuation ratios on the market. The company's forward price-to-earnings (P/E) ratio stands at 15.5, compared to the healthcare industry's average of 17.5. AbbVie looks attractive at current levels, given its prospects and excellent dividend program. Here's why. Despite losing patent exclusivity for one of the most lucrative drugs ever, AbbVie's top line is moving in the right direction.

The company's revenue in 2024 increased by 3.7% to $56.3 billion. AbbVie's adjusted earnings per share for the year decreased by 9% year over year to $10.12, although that was partly because of acquisition-related expenses. Replacing a drug that generated more than $20 billion in annual sales at its peak is not easy, so the fact that AbbVie's revenue is growing at all is impressive. The company's setback with emraclidine isn't the end of the world either. AbbVie's pipeline features dozens of programs, and the company has the means to strike deals with other (smaller) drugmakers to replenish its lineup.

AbbVie's underlying business remains strong, and so does its dividend program. The company is a Dividend King with 52 consecutive years of dividend increases under its belt. It also offers a forward yield of about 3.7%. Income investors can't go wrong with this stock.

2. Gilead Sciences

Gilead Sciences has performed well in the trailing-12-month period. The company's shares are up by almost 29%. Still, the drugmaker's shares look like a bargain, given its forward P/E of 12.9. Gilead Sciences has several things going its way beyond its valuation. The company's lineup of medicines, led by its HIV products, continues to perform well. In the first nine months of 2024, Gilead's revenue increased by a respectable 6% year over year to $21.2 billion.

The company reported adjusted EPS of $2.72 in the period, down almost 46% compared to the third period of the previous fiscal year, but like with AbbVie, that was largely due to charges related to acquisitions. Gilead's HIV regimen, Biktarvy, remains the leader in the U.S., and once again grew its market share, which now stands at more than 49%. Further, Gilead Sciences has substantially decreased its reliance on its coronavirus medicine, Veklury, which significantly helped keep its sales afloat in the early pandemic years.

And regarding its pipeline, Gilead Sciences is making progress on multiple fronts. The company is developing medicines across various therapeutic areas, including HIV, immunology, and oncology. Gilead Sciences has ramped up its oncology-related efforts in the past few years. It is running more than two dozen clinical trials in this area, many of which are phase 3 studies. Some of Gilead Sciences' existing products, such as long-acting HIV medicine Sunlenca, will earn label expansions in the future.

So, Gilead Sciences' financial results should remain strong. Meanwhile, the drugmaker has increased its dividend by about 79% in the past 10 years, and its forward yield is about 3.1%. This dividend stock is an excellent pick for long-term income-seeking investors, especially at current levels.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Gilead Sciences. The Motley Fool has a disclosure policy.