Updated 3/13/25
If you’re a dividend investor who prefers consistency over flash, Quest Diagnostics might be a name worth knowing. It’s carved out a dependable niche in the healthcare world—quietly producing steady results and treating its shareholders well in the process.
Quest operates one of the largest diagnostic testing networks in the U.S. It’s deeply embedded in the healthcare system, offering everything from routine blood tests to complex genetic screenings. This isn’t a glamorous business, but it’s essential—and that kind of necessity tends to lead to reliability. For income-focused investors, that reliability can be pretty appealing.
Let’s take a closer look at what’s happening with Quest now, and how its dividend measures up for investors who prioritize income with a side of safety.
Recent Events
Quest wrapped up 2024 on strong footing. Earnings for the latest quarter grew more than 15% year-over-year, with revenue climbing nearly 15% as well. That’s a solid result for a company in a mature sector. While pandemic-driven testing has dropped off, the base business is proving to be sturdy. Core volumes have held up well, and Quest has been finding efficiencies—boosting margins even without major top-line growth drivers.
The stock itself has been on a roll. Up almost 30% in the past 12 months, DGX has handily outpaced the broader market. That kind of run might make income investors a bit cautious about entering at current levels. But there’s more to the story, especially when you dig into the dividend.
Key Dividend Metrics
📈 Forward Yield: 1.91%
💰 Annual Dividend: $3.20 per share
🔁 5-Year Average Yield: 1.89%
📊 Payout Ratio: 38.5%
📆 Ex-Dividend Date: April 7, 2025
💸 Dividend Date: April 21, 2025
📈 Dividend Growth Streak: Over 10 years
🔐 Dividend Safety: Supported by strong free cash flow
Dividend Overview
At first glance, Quest’s dividend yield might not turn heads. It sits just under 2%, which feels modest in today’s market. But this is where a steady hand counts more than a headline number.
Quest has been increasing its dividend consistently for more than a decade. The latest hike brought the annual payout to $3.20 per share, showing that the company’s commitment to returning cash to shareholders hasn’t wavered. The payout ratio is comfortably under 40%, giving it plenty of flexibility going forward.
What makes the dividend especially attractive is its consistency. It’s not aggressive, but it’s dependable—and that’s often the kind of setup long-term income investors favor. Operating cash flow over the past year came in at $1.33 billion, more than enough to cover the dividend with room to spare.
Dividend Growth and Safety
Dividend safety is often where income stories fall apart, but not here. Quest’s dividend is well-protected, not just by earnings but by its reliable business model and strong free cash flow.
The company has increased its dividend every year for over a decade. Growth has been steady—typically in the 6 to 8 percent annual range. It’s not eye-popping, but it’s meaningful, especially when inflation is factored in.
With a payout ratio at 38.5%, Quest isn’t stretching to make its payments. That gives it room to keep growing the dividend, even if earnings cool off in a tougher economic environment. And it’s not just about earnings. Levered free cash flow over the past year was $741 million—ample support for the dividend without stressing the balance sheet.
Chart Analysis
Trend and Moving Averages
Looking at the chart for Quest Diagnostics (DGX), there’s a clear uptrend that began around early May of last year. The price action steadily climbed, with the 50-day simple moving average (SMA) consistently staying above the 200-day SMA since mid-summer—a classic sign of sustained bullish momentum. Both moving averages are upward sloping, which reinforces the longer-term strength of the trend.
The recent price pullback from highs near $178 to the current level around $166 appears to be a short-term correction rather than a reversal. Price is still well above the 200-day SMA, and even after the drop, it remains near the 50-day line, suggesting that buyers haven’t fully stepped away.
Volume Behavior
Volume has been mixed but telling. There were notable surges in volume in early February and again during the recent pullback, which likely reflects active profit-taking after the run-up to recent highs. Interestingly, volume stayed relatively elevated during both the climb and the dip, indicating strong participation and interest in the stock—an important piece when trying to understand investor behavior during these moves.
There’s no sign of climactic volume that usually precedes a major trend shift, so while the pullback deserves attention, it doesn’t look like distribution is fully underway.
Relative Strength Index (RSI)
The RSI dipped from an overbought zone (above 70) in early March and is now trending down but still holding above neutral levels. That earlier overbought reading aligned with the February rally, and the current cooldown is pretty natural after such a sharp move higher.
RSI is not in a danger zone just yet, but the declining slope suggests short-term momentum is cooling. That lines up with the price action pulling back from recent highs.
Last Five Candles
The last five daily candles paint a picture of growing indecision. There’s a clear shift from bullish momentum to a more hesitant, range-bound tone. Several of the candles show longer upper wicks, especially near the $175 to $178 range—evidence of selling pressure stepping in at those highs. The latest candles are narrower in body size, suggesting the market is pausing, possibly digesting gains.
No heavy downside reversal candle has appeared yet, but the waning upward pressure combined with higher volume suggests we’re seeing either early distribution or just a healthy breather within a broader uptrend. Either way, bulls have lost the aggressive control they had just a few weeks ago.
Analyst Ratings
📉 On March 4, 2025, Citigroup downgraded Quest Diagnostics from a buy to a neutral rating. The price target was held steady at $185.00. This change came on the back of concerns about slowing earnings momentum and potential pricing pressure in the diagnostic services market. Analysts noted that while the company remains fundamentally strong, its recent run-up in price may limit short-term upside. There’s also growing caution around volume normalization post-COVID and tougher year-over-year comps.
📈 On the flip side, back on January 6, 2025, Leerink Partners moved in the opposite direction, upgrading DGX from hold to buy. They lifted their price target from $135.00 to $174.00. Their thesis leaned on renewed strength in routine test volumes and what they saw as underappreciated operating leverage. Management’s continued focus on cost control and digital integration also helped bolster their more bullish outlook.
🧮 Currently, the overall analyst sentiment leans toward a moderate buy. Among 15 analysts covering the stock, the consensus 12-month price target is $178.38. Targets range from a low of $165.00 to a high of $191.00, putting the stock’s current price near the middle of that band. With shares trading around $167.33, that consensus implies roughly 6.6% upside potential.
📊 These rating moves highlight the push and pull between valuation concerns and longer-term fundamentals. While some are tapping the brakes after a strong rally, others still see room for upside based on operational strength and the company’s critical role in healthcare diagnostics.
Earning Report Summary
Quest Diagnostics ended 2024 on a solid note, with its fourth-quarter numbers showing strong momentum heading into the new year. Revenue for the quarter came in at $2.62 billion, which was a healthy 14.5% jump from the same time last year. Most of that growth came from steady organic gains and some help from recent acquisitions, which gave the top line an extra boost.
On the earnings front, diluted EPS landed at $1.95, which is a nice improvement from last year’s number. Adjusted EPS, which strips out one-time items, came in at $2.23. It’s not just that Quest is growing—it’s also managing to do so while keeping profitability in check. That balance between top-line growth and solid earnings execution is something long-term investors tend to appreciate.
For the full year, Quest pulled in just under $10 billion in revenue, finishing 2024 with a 6.7% increase over the prior year. Full-year EPS came in at $7.69, while adjusted EPS reached $8.93. The company’s ability to consistently deliver stable earnings, especially in a post-pandemic environment where testing volumes have normalized, speaks to the strength of the underlying business.
Operating income for the quarter was also strong, hitting $361 million and making up nearly 14% of revenue. On an adjusted basis, operating income was even higher at $409 million. That improvement in operating margins shows that Quest is running more efficiently—getting more out of every dollar coming in.
Cash flow was another highlight, with $464 million generated from operations in just the fourth quarter. Capital spending totaled $123 million, which shows they’re continuing to invest in the infrastructure and tech needed to grow over time.
Shareholders got a little extra reason to smile too. The company bumped up its quarterly dividend by 6.7%, now paying $0.80 per share. That marks the 14th straight year of dividend increases, a clear sign that returning capital to investors remains a key priority.
Looking ahead, Quest is aiming for full-year 2025 revenue between $10.7 billion and $10.85 billion. On the earnings side, they’re guiding for reported EPS between $8.34 and $8.59, and adjusted EPS somewhere in the $9.55 to $9.80 range. These are ambitious but reasonable targets, and they reflect a company that feels pretty good about where it’s headed.
Financial Health and Stability
From a balance sheet perspective, Quest is in solid shape. Total debt stands at $7.1 billion, which sounds hefty. But when you stack that up against EBITDA of $1.9 billion, the leverage doesn’t look out of control. Interest coverage remains healthy, and there’s no sign that the company is struggling to manage its obligations.
The company’s return on equity is close to 14%, and return on assets is nearly 6%—solid numbers for a business that leans heavily on infrastructure and scale. Cash on hand sits just under $550 million, and the current ratio of 1.1 suggests liquidity is under control. While the debt-to-equity ratio is on the higher side, Quest hasn’t had any trouble managing it.
They’ve also been active on share repurchases, which supports EPS growth and can indirectly help with dividend sustainability.
Valuation and Stock Performance
Valuation is a tricky one here. DGX isn’t a screaming bargain, but it’s not unreasonably priced either. The forward P/E is around 17, with a PEG ratio of 1.37. That suggests the market expects steady, manageable growth—not explosive expansion.
Enterprise value to EBITDA sits around 13, which aligns with historical averages. And the price-to-book ratio of 2.74 reflects the kind of premium you often see in high-quality, steady cash-flow businesses.
Over the past year, shares have moved from a low of about $125 to recent levels near $168. That puts the stock close to its 52-week high. For income investors already holding shares, it’s been a rewarding run. For those eyeing an entry, it’s worth noting that the stock’s beta is under 1. That means it tends to move less than the broader market—something dividend investors often value.
Risks and Considerations
No dividend is without risk, and DGX has its share of potential headwinds. One of the biggest ongoing concerns is pricing. A significant chunk of Quest’s business comes from reimbursements via private insurers and government programs. If there’s pressure on those rates, margins could take a hit.
Competition is also a factor. While Quest and LabCorp dominate the national testing market, there’s plenty of regional and hospital-based competition. The rise of at-home testing kits could also shift demand patterns over time.
From a dividend standpoint, the biggest risk is likely a slowdown in earnings growth. But even in a scenario where growth stalls out, the dividend looks sustainable. The company’s strong cash flow and moderate payout ratio offer a cushion. It’s more likely we’d see slower dividend growth than a cut, barring any major business disruption.
Final Thoughts
Quest Diagnostics isn’t a stock that gets people excited—and that’s kind of the point. For dividend investors, it’s the kind of company that quietly goes about its business, steadily growing earnings and sharing those profits with shareholders.
The yield may not be high, but it’s dependable. The company’s history of dividend growth, combined with its strong financial footing, gives it the kind of staying power that long-term income investors often seek.
If you’re building a portfolio for the long haul—one that prizes predictability and resilience—Quest has a lot going for it. It’s not a dividend darling in the traditional sense. But it might be one of those stocks that you’re glad to own year after year, without having to think too much about it. And in today’s world, that’s worth something.