Updated 3/5/25
Abbott Laboratories (NYSE: ABT) has built a reputation as a reliable dividend payer, making it a strong candidate for income-focused investors. With a long history of steady payouts and consistent increases, Abbott has earned its place among dividend-focused stocks. Below is a closer look at its dividend performance and what it means for investors seeking long-term income.
Key Dividend Metrics
- Forward Annual Dividend Yield: 1.72% 🟡
- Trailing Annual Dividend Yield: 1.63% 🟡
- 5-Year Average Dividend Yield: 1.66% 🟡
- Dividend Growth Rate (5-Year CAGR): ~10% 🟢
- Payout Ratio: 28.8% 🟢
- Dividend Safety: Very High 🟢
- Ex-Dividend Date: April 15, 2025 📅
- Next Dividend Payment Date: May 15, 2025 📅
- Consecutive Years of Dividend Increases: 52+ Years 🟢
Abbott’s Dividend Profile: A Stable and Growing Payout
Investors who prioritize dividend consistency will appreciate Abbott’s track record. The company has increased its dividend every year for more than five decades, securing its place as both a Dividend Aristocrat and a Dividend King. That kind of stability is rare, and it signals Abbott’s long-term commitment to rewarding shareholders.
The most recent dividend increase was announced in December 2023, bringing the annual payout to $2.36 per share. Abbott pays dividends quarterly, with the next ex-dividend date set for April 15, 2025, and the payout scheduled for May 15, 2025.
Dividend Safety and Sustainability
Abbott’s dividend is not just consistent—it’s also highly sustainable. With a payout ratio of just 28.8%, the company retains plenty of earnings to reinvest in growth while continuing to reward shareholders. This low payout ratio is a strong indicator that future dividend increases are likely.
Beyond that, Abbott’s business remains healthy. Revenue grew 7.2% year-over-year in the most recent quarter, and earnings per share jumped an impressive 479% over the same period. Strong cash flow also supports the company’s ability to continue paying and increasing dividends, with operating cash flow at $8.56 billion and levered free cash flow at $5.61 billion.
The company’s financial strength further reinforces its dividend stability. Abbott maintains a conservative capital structure, with a total debt-to-equity ratio of 31.89%. It also holds $7.97 billion in cash reserves, giving it plenty of flexibility to cover dividend payments even in economic downturns.
Yield and Valuation Considerations
While Abbott offers a reliable and growing dividend, one potential drawback for income investors is its yield. At 1.72%, it’s not particularly high compared to some other dividend-paying stocks. The yield is slightly below its five-year average, which suggests the stock may be priced at a premium right now.
For investors who focus on long-term dividend growth rather than immediate yield, this isn’t necessarily a bad thing. Abbott has consistently raised its dividend at a strong pace, averaging around 10% annual growth over the last five years. That means investors who hold the stock for the long term can benefit from increasing payouts over time.
Chart Analysis
The chart for Abbott Laboratories (ABT) presents a strong uptrend, with the stock recently experiencing a significant breakout above prior resistance levels. The price has moved well above both the 50-day (orange) and 200-day (blue) moving averages, indicating strong momentum and bullish sentiment.
Looking at the price action, the stock was range-bound for much of last year, fluctuating around the 50-day moving average without making significant gains. However, in early 2025, there was a decisive shift in momentum, with the stock breaking out and rallying sharply. The recent spike took the stock near $140 before pulling back slightly to its current level around $136.
Volume has played a key role in this move. During the breakout, there was a noticeable increase in buying volume, confirming institutional interest. The green volume bars show periods of accumulation, while the red bars indicate some selling pressure along the way. While volume has tapered off in recent sessions, it remains within a healthy range, suggesting that investors are still engaged.
The RSI (Relative Strength Index) sits around 63.5, which is in bullish territory but not yet overbought. This suggests that while the stock has seen strong buying pressure, it isn’t yet at extreme levels that typically lead to a sharp pullback. Earlier in February, the RSI did reach higher levels, but the recent slight decline suggests some consolidation may be taking place.
The past five candlesticks reveal mixed sentiment. The most recent candle shows a slight retracement, with an upper wick that suggests some selling pressure at higher levels. The previous four candles showed strong upward momentum, with limited downside wicks, signaling steady buying. This suggests the rally may be cooling off in the short term as traders take profits.
Overall, the trend remains strong, and the stock is holding well above key support levels. The upward slope of the moving averages indicates that momentum is still in favor of buyers, and unless there is a major reversal, the trend remains intact.
Analyst Ratings
Abbott Laboratories (ABT) has recently been the subject of both upgrades and downgrades by financial analysts, reflecting a range of perspectives on the company’s prospects. The consensus 12-month price target among analysts is approximately $138.93, with estimates ranging from a high of $160.00 to a low of $117.00.
Upgrades:
Citigroup recently raised its price target for Abbott Laboratories from $135.00 to $160.00, maintaining a “buy” rating on the stock. This upgrade was influenced by Abbott’s robust performance in its diabetes care segment, particularly the strong sales growth of its continuous glucose monitoring systems. The company’s positive sales outlook for 2025, projecting organic growth between 7.5% and 8.5%, also contributed to the optimistic assessment.
Downgrades:
In contrast, some analysts have adopted a more cautious stance. Factors contributing to these downgrades include concerns about potential headwinds in Abbott’s nutrition and diagnostics divisions, which have faced challenges such as currency exchange impacts and competitive pressures. Additionally, the company’s valuation metrics, including a forward P/E ratio higher than some industry peers, have led certain analysts to recommend a “hold” position, suggesting that the stock may be fairly valued at its current price.
These mixed analyst opinions underscore the importance of considering both the company’s growth prospects and potential risks when evaluating Abbott Laboratories as an investment.
Earnings Report Summary
Abbott Laboratories wrapped up 2024 on a strong note, showing solid growth across its business. The company pulled in $11 billion in revenue for the fourth quarter, marking a healthy 7.2% increase from the same time last year. For the full year, sales reached $42 billion, up 4.6%, reflecting steady momentum even as COVID-related revenues continued to decline.
What really stood out was the strength of Abbott’s core business. Excluding COVID testing, organic sales jumped 10.1% in the fourth quarter and 9.6% for the entire year. This shows that the company’s main operations—especially in medical devices, nutrition, and diagnostics—are driving growth without relying on pandemic-related sales.
On the earnings side, things were just as strong. Abbott reported fourth-quarter earnings per share (EPS) of $5.27 on a GAAP basis, while adjusted EPS, which removes one-time costs, came in at $1.34. For the full year, EPS reached $7.64, with an adjusted figure of $4.67. These numbers show that the company is not only increasing sales but also improving profitability, which is great news for investors.
A big part of Abbott’s success came from its medical devices division, which saw a major boost. Sales in this segment grew 14% organically, with particularly strong performances from the Diabetes Care and Structural Heart businesses, both of which reported over 20% revenue growth. The FreeStyle Libre glucose monitoring system continues to be a major growth driver, helping Abbott expand its footprint in the fast-growing diabetes market.
Looking ahead, the company has an optimistic outlook for 2025. Abbott expects organic sales growth between 7.5% and 8.5%, which would build on its strong performance in 2024. It’s also forecasting an improved operating margin, aiming for a range of 23.5% to 24%. Adjusted EPS guidance for the year is set between $5.05 and $5.25, which, at the midpoint, would represent double-digit growth compared to last year.
Overall, Abbott continues to execute well across its core businesses, with strong revenue growth, expanding margins, and a positive outlook for the year ahead. Investors seem to have plenty to look forward to as the company continues its steady climb.
Stock Performance and Total Return Potential
Abbott’s stock has performed well recently, climbing 15.28% over the past year and outperforming the S&P 500’s 13.19% return. The stock is currently trading near its 52-week high of $141.23, with a low over the past year of $99.71.
This strong performance suggests that Abbott’s total return potential, which includes both stock price appreciation and dividend payments, remains attractive. However, with a forward price-to-earnings (P/E) ratio of 26.74, Abbott isn’t necessarily a bargain. Investors looking for an entry point might want to wait for a market pullback to get a better value.
How Abbott Compares to Other Dividend Stocks
For income investors, it’s important to compare Abbott’s dividend profile to other major dividend-paying healthcare stocks like Johnson & Johnson (JNJ), Medtronic (MDT), and Pfizer (PFE).
- Abbott’s 1.72% dividend yield is lower than Johnson & Johnson (2.85%) and Medtronic (3.29%), but it has a much lower payout ratio, giving it more room for future growth.
- While Pfizer offers a much higher yield at 5.42%, its payout ratio is around 80%, raising concerns about sustainability.
- Abbott’s dividend growth rate of ~10% over the past five years is higher than that of both Johnson & Johnson and Medtronic, making it an attractive option for investors who prioritize long-term growth over immediate yield.
Final Thoughts for Dividend Investors
Abbott Laboratories is an excellent choice for investors looking for a combination of dividend stability and long-term growth potential. The company has a remarkable track record of increasing dividends, a low payout ratio, and strong financial health, making it a low-risk option for those seeking reliable income.
For investors focused on yield, Abbott may not be the best choice, as its yield is lower than many other dividend-paying stocks. However, for those who prioritize dividend growth and long-term sustainability, Abbott remains one of the most dependable options in the healthcare sector. While the stock is trading at a premium, patient investors could find better buying opportunities during market pullbacks.
Overall, Abbott’s dividend is well-supported by strong earnings, cash flow, and a solid balance sheet, making it an attractive holding for long-term income investors.
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