Tags: abbott | laboratories | dividend | aristocrat

Abbott Labs Pays 380th Consecutive Quarterly Dividend

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By Wednesday, 23 January 2019 01:08 PM Current | Bio | Archive

There is an abundance of healthcare stocks on the list of Dividend Aristocrats. To qualify as a Dividend Aristocrat, a company must be in the S&P 500 Index, and have raised its dividend for at least 25 years in a row.

Abbott Laboratories (ABT) is one of six Dividend Aristocrats hailing from the healthcare sector. Abbott’s ability to hike its dividend each year is due to its diversified portfolio of category-leading products. The company’s balanced business model leads to steady profits each year, even during recessions, and has fueled the company’s 47-year streak of dividend increases.

Portfolio Diversification Pays Dividends

Abbott Laboratories is a healthcare giant with roughly $29 billion in annual sales. It was founded over 130 years ago, and today operates four large businesses: Nutrition, Pharmaceuticals, Diagnostics, and Medical Devices.

Abbott’s products hold leadership positions across their respective categories. For example, Abbott is #1 in adult nutrition, blood and plasma screening, heart pumps, remote heart failure monitoring, point of care testing, and chronic pain devices. Just a few of its recognized brands include Ensure, Similac, Pedialyte, PediaSure, Brufen, and Alinity.

Abbott has a long runway of growth up ahead. One of its most attractive growth catalysts are emerging markets around the world, such as China. Emerging markets collectively have large populations and high economic growth rates, making them very appealing for expansion. The emerging markets represent more than 40% of Abbott’s annual sales. Another compelling growth catalyst for Abbott is the aging U.S. population. Combined with positive GDP growth, healthcare spending is likely to continue increasing in the U.S. for many years.

The company performed very well in 2018, and 2019 is set to be another year of growth. Third-quarter sales increased 12%, or 7.8% excluding foreign exchange and acquisitions. Organic sales rose 7.6% through the first three quarters combined, led by 9% growth in medical devices and 8% growth in established pharmaceuticals.

Abbott grew net profits by 16% in the third quarter, while earnings per share rose 14% from the same quarter a year ago. For 2018, Abbott expects EPS of $2.87 to $2.89. Abbott is expected to grow earnings by 6%-7% per year over the next five years.

Investor Takeaway

With its strong growth, Abbott rewards shareholders with steady dividends. Abbott recently increased its dividend by 14%, marking the company’s 380th consecutive quarterly dividend since 1924. It has a unique ability to raise its dividend each year, no matter what the broader economy is doing.

The current dividend yield of the stock is 1.8%, which is slightly below the average yield in the S&P 500 Index. But Abbott’s high rate of dividend growth makes up for a low current yield. For example, if the company continued to increase its dividend by 14% per year, it would double its dividend payment every 5.1 years on average. Abbott is a high-quality Dividend Aristocrat for investors looking for growth and income.

Ben Reynolds is CEO of Sure Dividend. Sure Dividend helps individual investors build high quality dividend growth stock portfolios for the long run.

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Abbott’s ability to hike its dividend each year is due to its diversified portfolio of category-leading products.
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Wednesday, 23 January 2019 01:08 PM
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