Prediction: Here's What $10,000 Invested in AbbVie Stock With Dividends Reinvested Could Be Worth in a Decade

If you were fortunate enough to invest $10,000 in AbbVie (NYSE: ABBV) stock a decade ago and reinvested its dividends, you would be sitting on $61,425.56 right now, with an average annual return of 19.91%.

The pharmaceutical company, through those returns, richly rewarded the investors who bought its shares despite concerns about the patent cliff that awaited what was then the world's most lucrative drug, Humira.

It's unlikely that history would repeat itself for anyone buying AbbVie stock today. Because the company has already hurdled that patent cliff, the stock has risen and is a lot pricier than it was back then, with a trailing price-to-earnings (P/E) ratio of 75. On top of that, the dividend yield is at one of the lowest points it has been over the past decade, at 2.6%.

The combination of a higher price and a lower dividend yield means that there's less room for the stock to rise at its current price. What happens to AbbVie stock over the next decade depends on several factors. Let's look at three possible scenarios.

The conservative approach points to a 6% annual return

If patent pressures, such as biosimilar competition for legacy blockbusters, weigh more heavily on multiple expansion and total returns moderate toward a pure utility-like healthcare profile, your $10,000 would grow to approximately $17,908 in 10 years.

While the company has 14 drugs facing patent expirations between now and 2031, only one of them, antipsychotic therapy Vraylar, is among the company's top 10-selling therapies as of the second quarter. The company is estimating high single-digit sales growth through the end of the decade, so by that matrix, an annual return of only 6% is somewhat pessimistic.

The moderate approach would mean an 8.5% to 9.5% annual return

Assuming steady execution on its immunology pipeline, especially by Skyrizi and Rinvoq, and continued mid-single-digit dividend growth matching historical averages, a balanced 9% total return compounds your principal to roughly $23,674 after a decade.

Over the past decade, it has increased its dividend by 203%, with an average annual increase of 11.9% to 12% annually. However, that rate has slowed, and unless the company changes course, the stock's total return will struggle to reach double digits at its current pace.

AbbVie upped its dividend by 5.5% this year, marking the 53rd consecutive year it has increased its dividend, including its time as part of Abbott Laboratories. That means AbbVie is a Dividend King, one of the rare stocks that have increased their dividend for 50 or more consecutive years.

The optimistic approach means 12% or more greater annual returns

AbbVie isn't just bringing in billions with its immunology blockbusters of Skyrizi and Rinvoq; it is using its sales to fund aggressive research and development (R&D), and those efforts are already showing signs of paying off.

For example, on Sept. 3, the company released positive data on T-cell engager therapy etentamig's phase 3 trial as a therapy to treat the blood cancer multiple myeloma. The trial showed improved response rates and progression-free survival in patients with relapsed/refractory multiple myeloma. The American Cancer Society estimates that there will be about 36,000 new cases of multiple myeloma in the U.S. this year.

The company also spent $10.9 billion to purchase Apogee Therapeutics, and if its atopic dermatitis therapy candidate, zumilokibart, is also able to treat other inflammatory conditions, it could become a huge blockbuster.

If the company's newer oncology and neuroscience assets outperform expectations and its valuation multiples hold firm, the stock could compound at 12% annually, turning your initial $10,000 outlay into roughly $31,058 in just 10 years.

James Halley has positions in AbbVie. The Motley Fool has positions in and recommends AbbVie and Abbott Laboratories. The Motley Fool has a disclosure policy.