My Favorite Dividend King to Buy in November

You can sometimes immediately know the quality of a product by the group it's in. For example, when Consumer Reports includes a product in its list of the best brands in a given area, it's probably a good pick to buy.

Does anything along these lines exist for dividend stocks? In a way, yes. Stocks that are members of the elite group known as Dividend Kings usually have especially reliable dividends. That's because, to become a member of the Dividend Kings, a company must have increased its dividend for at least 50 consecutive years.

But some Dividend Kings are better than others. Here's my favorite Dividend King to buy in November.

A dividend that's more noble than most

AbbVie (NYSE: ABBV) sometimes receives an asterisk next to its 53-year streak of consecutive dividend increases. Why? The big drugmaker has only existed as a stand-alone company since 2013, when it was spun off by Abbott Labs (NYSE: ABT). However, AbbVie continued the pattern of increasing its dividend that Abbott began decades ago.

I think that AbbVie deserves its spot among the Dividend Kings because its business was instrumental in Abbott's success before the spinoff. What's more, I believe that AbbVie has a dividend that's more noble than most.

Consider that the company has grown its dividend by a whopping 310% since being spun off from Abbott. Today, AbbVie's forward dividend yield stands at 2.9%. That yield is near the lowest level in recent years due to the pharma stock's strong performance. AbbVie's average dividend yield over the last five years is a lofty 3.8%.

Don't worry about AbbVie's high dividend payout ratio of roughly 304%. The drugmaker generates ample free cash flow to cover its dividend payments. As we're about to see, the company's prospects of increased earnings and free cash flow are encouraging, too.

A clear growth runway

AbbVie has a clear growth runway ahead of it. That might be a little surprising considering what the company has been through recently.

Beginning in 2023, AbbVie faced a patent cliff of epic proportions. Humira had not only been the company's top-selling drug; it ranked as the world's biggest-selling drug for several years. But AbbVie had to deal with rapidly declining sales for the autoimmune disease therapy after biosimilar competition entered the U.S. market almost three years ago.

Today, though, AbbVie has two successors to Humira on the market that are absolutely crushing it. Skyrizi and Rinvoq should generate combined sales this year of over $25 billion. At its peak in 2022, Humira's sales totaled around $21 billion. AbbVie thinks Skyrizi and Rinvoq will together pull in more than $31 billion by 2027.

In addition to these two blockbuster drugs, AbbVie's lineup includes several other rising stars. Sales for migraine drugs Qulipta and Ubrelvy are skyrocketing. Cancer drug Elahere is gaining strong momentum. Antipsychotic therapy Vraylar and Botox for therapeutic use continue to deliver double-digit percentage sales growth as well.

AbbVie's pipeline also looks promising. The company has around 50 programs in mid- or late-stage clinical development. Two that I'm especially watching are experimental multiple myeloma therapy etentamig and Parkinson's disease drug tavapadon.

An attractive valuation

Many investors probably wouldn't mind paying a moderate premium for a Dividend King with solid growth prospects. But with AbbVie, they don't have to.

The stock's forward price-to-earnings ratio is 16.8. That's much lower than the S&P 500's (SNPINDEX: ^GSPC) forward earnings multiple of 23. It's also below the S&P 500 healthcare sector's forward P/E of 17.5.

I think that the combination of AbbVie's attractive valuation and stable business should enable the stock to hold up well even if the overall stock market tumbles. This Dividend King seems likely to reign regardless of what the market does.

Keith Speights has positions in AbbVie. The Motley Fool has positions in and recommends AbbVie and Abbott Laboratories. The Motley Fool has a disclosure policy.