Dividend Kings In Focus: Abbott Laboratories – Sure Dividend

Up to date on November 1st, 2024 by Felix Martinez

Abbott Laboratories (ABT) has elevated its dividend for over 52 consecutive years, and because of this, it has joined the record of Dividend Kings.

The Dividend Kings are a gaggle of simply 53 shares which have elevated their dividends for not less than 50 years in a row. Given this longevity, we consider the Dividend Kings are among the many highest-quality dividend progress shares to purchase and maintain for the long run.

With this in thoughts, we created a full record of all 53 Dividend Kings. You possibly can obtain the total record, together with necessary monetary metrics equivalent to dividend yields and price-to-earnings ratios, by clicking on the hyperlink under:

Abbott is a diversified healthcare large with a protracted runway of progress forward. Whereas the inventory seems barely overvalued, it may well proceed to be relied upon for annual dividend will increase.

This text will talk about the corporate’s enterprise overview, progress prospects, aggressive benefits, and anticipated returns.

Enterprise Overview

Abbott Laboratories is a healthcare inventory with a market capitalization of $161 billion. Based in 1888, it’s headquartered in Lake Bluff, Illinois.

Abbott operates in 4 fundamental segments: Dietary Merchandise, Established Prescribed drugs, Diagnostics, and Medical Gadgets, and enjoys a management place throughout product segments.

Supply: Investor Presentation

Abbott Laboratories reported third-quarter 2024 gross sales of $10.6 billion, a 4.9% enhance in reported gross sales, and an 8.2% rise in natural gross sales progress, pushed by sturdy performances in its Medical Gadgets sector. The corporate posted a GAAP diluted earnings per share (EPS) of $0.94 and an adjusted EPS of $1.21, excluding particular gadgets. Sustaining its full-year steerage, Abbott initiatives natural gross sales progress between 9.5% and 10.0%, excluding COVID-19 testing gross sales, and has raised its adjusted EPS forecast to a spread of $4.64 to $4.70.

Abbott continued to reinforce its choices all through the quarter with new product approvals, reimbursement agreements and expanded scientific knowledge. Highlights included the launch of Lingo™, a non-prescription steady glucose monitoring system aimed toward wellness-focused customers, and a strategic partnership with Medtronic to combine Abbott’s glucose monitoring expertise with Medtronic’s insulin supply gadgets. Moreover, Abbott accomplished enrollment in its VOLT-AF IDE trial for its Volt™ Pulsed Area Ablation System for atrial fibrillation therapy, reinforcing its dedication to advancing well being expertise.

Abbott’s board additionally approved a $7 billion share repurchase program, signaling confidence within the firm’s progress trajectory. The corporate reported continued progress in key markets, significantly inside its Established Prescribed drugs and Medical Gadgets segments, with merchandise like FreeStyle Libre® and AVEIR® contributing to sturdy gross sales. CEO Robert B. Ford emphasised that these outcomes showcase the energy of Abbott’s diversified portfolio and place it to realize the higher finish of its 2024 monetary steerage, setting a robust basis for continued momentum into 2025.

Progress Prospects

Wanting forward, Abbott Laboratories has two main progress prospects. The primary is the growing older inhabitants, each inside america and internationally. In 2019, 9.1% of the worldwide inhabitants exceeded age 65. This proportion is anticipated to succeed in 16.7% in 2050.

As folks age, they have a tendency to want extra medical therapies, together with lots of the therapies that Abbott produces.

The corporate’s concentrate on rising markets is the second broad tailwind that may profit Abbott Laboratories. That is significantly true for its Branded Generic Prescribed drugs phase.

Supply: Investor Presentation

Abbott has a robust place in progress markets equivalent to diagnostics. It is the market chief in level–of–care diagnostics and cardiovascular medical gadgets.

Lastly, share repurchases, which Abbott spends billions of {dollars} on yearly, will increase earnings per share.

In consequence, Abbott ought to be capable of generate engaging lengthy–time period progress charges for each earnings–per–share and dividends. Total, we anticipate 5% annual earnings-per-share progress for Abbott over the subsequent 5 years.

Aggressive Benefits & Recession Efficiency

Abbott Laboratories’ first aggressive benefit is its model recognition amongst its shopper medical merchandise, significantly in its Diet phase.

Abbott Laboratories manufacturers, led by noteworthy merchandise just like the Guarantee meal alternative complement, permits its gross sales to face sturdy by even the worst financial recessions.

Abbott’s second aggressive benefit element is its concentrate on analysis and improvement. The corporate’s R&D expense over the past 5 years is proven under:

2018 analysis & improvement expense: $2.3 billion
2019 analysis & improvement expense: $2.4 billion
2020 analysis & improvement expense: $2.4 billion
2021 analysis & improvement expense: $2.7 billion
2022 analysis & improvement expense: $2.8 billion

Abbott Laboratories’ funding in analysis & improvement reveals that the corporate is keen to play the lengthy sport, constructing out its product pipeline and enhancing its long-term enterprise progress prospects.

As a big, diversified healthcare enterprise, Abbott Laboratories is awfully recession-resistant. The corporate truly elevated its adjusted earnings-per-share throughout every year of the 2007-2009 monetary disaster.

2007 earnings-per-share of $2.84
2008 earnings-per-share of $3.03 (6.7% enhance)
2009 earnings-per-share of $3.72 (22.8% enhance)
2010 earnings-per-share of $4.17 (12.1% enhance)

As you possibly can see, Abbott truly grew its earnings-per-share every year through the Nice Recession.

We anticipate this recession-resistant Dividend King to carry out equally properly throughout future downturns within the enterprise setting.

From a dividend perspective, Abbott’s dividend additionally seems very protected. The corporate has a projected dividend payout ratio of 46% for 2023. Abbott has raised its dividend for 51 consecutive years, and has paid dividends to shareholders for almost 100 consecutive years.

Valuation & Anticipated Complete Returns

Based mostly on an anticipated EPS of $4.67 for 2024, Abbott inventory has a price-to-earnings ratio of 24.2. This valuation is noticeably greater than its long-term common.

Our truthful worth price-to-earnings ratio is 22, which means the inventory seems to be barely overvalued. A declining P/E a number of may cut back annual returns by 2% over the subsequent 5 years.

The opposite main element of Abbott Laboratories’ future complete returns would be the firm’s earnings-per-share progress. We anticipate 7% annual EPS progress for the corporate.

Lastly, Abbott’s complete returns can be boosted by the corporate’s dividend funds. Shares at the moment yield 1.9%.

Total, Abbott Laboratories’ anticipated complete returns may very well be composed of:

7% earnings-per-share progress
1.9% dividend yield
-2% a number of reversion

Complete anticipated annual returns are forecasted at 6.9% by 2029. Given the valuation decline, we now price Abbott a maintain.

Remaining Ideas

Abbott Laboratories has a protracted historical past of rising its income and dividends, because of its sturdy model portfolio. Whereas the corporate’s present valuation fractionally exceeds its long-term common, Abbott Laboratories stays a maintain.

In case you are fascinated by discovering extra high-quality dividend progress shares appropriate for long-term funding, the next Certain Dividend databases can be helpful:

The main home inventory market indices are one other stable useful resource for locating funding concepts. Certain Dividend compiles the next inventory market databases and updates them month-to-month: