Dividend Aristocrats In Focus: Abbott Laboratories

Up to date on February twentieth, 2025 by Nathan Parsh

Abbott Laboratories (ABT) is a really well-known dividend development inventory, and for good motive. The corporate is a member of the unique Dividend Aristocrats, a bunch of elite dividend shares with 25+ years of consecutive dividend will increase.

We consider the Dividend Aristocrats are among the many greatest dividend shares to purchase and maintain for the long-term.

With this in thoughts, we created a full checklist of all 69 Dividend Aristocrats. You may obtain the total checklist, together with necessary monetary metrics equivalent to dividend yields and price-to-earnings ratios, by clicking on the hyperlink beneath:

Disclaimer: Certain Dividend shouldn’t be affiliated with S&P World in any manner. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet is predicated on Certain Dividend’s personal evaluation, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s primarily based. Not one of the data on this article or spreadsheet is official information from S&P World. Seek the advice of S&P World for official data.

Abbott is diversified throughout a number of areas of well being care, every of which has optimistic long-term development potential. This has fueled Abbott’s spectacular historical past and can proceed to take action within the years forward.

This text will talk about the funding prospects of Abbott Laboratories intimately.

Enterprise Overview

Abbott Laboratories is a diversified healthcare company with a market capitalization of $230 billion. Based in 1888, it’s headquartered in Lake Bluff, Illinois.

The corporate operates in 4 primary segments: Dietary Merchandise, Established Prescription drugs, Diagnostics, and Medical Gadgets. Abbott enjoys a management place throughout product segments.

The corporate’s Vitamin Merchandise section is a prime pediatric vitamin supplier in the US and another geographies. Furthermore, the section’s efficiency has improved significantly in recent times, because the working margin has improved annually since 2011.

Abbott Laboratories’ final section is the Medical Gadgets unit. This section was considerably bolstered in current occasions by the St. Jude Medical acquisition.

Supply: Investor Presentation

On January twenty second, 2025, Abbott Laboratories introduced fourth quarter and full earnings outcomes. For the quarter, the corporate generated $11 billion in gross sales (60.4% exterior of the U.S.), representing a 7.2% enhance in comparison with the fourth quarter of 2023. Adjusted earnings-per-share of $1.34 in comparison with $1.19 within the prior 12 months. Income was $30 million lower than anticipated whereas adjusted earnings-per-share had been in-line with estimates.

For the 12 months, income grew 4.6% to $42 billion whereas adjusted earnings-per-share of $4.67  in contrast favorably to $4.44 in 2023.

For the quarter, U.S. gross sales improved 10% whereas worldwide was up by 5.4%. Firm-wide natural gross sales elevated 8.8%. Nevertheless, excluding Covid-19 testing merchandise, natural development 10.1%.

Vitamin gross sales grew 7.1% organically as the corporate continues to see a restoration in market share of its toddler system enterprise following a stoppage of manufacturing in 2022.

Diagnostics improved 1%, marking the second consecutive quarter of development. Excluding Covid-19 gross sales, income was up 6.1%

Established Prescription drugs was greater by 8.5% as a consequence of beneficial properties in ladies’s well being, gastroenterology, and central nervous system and ache administration.

Medical Gadgets proceed to carry out effectively, with gross sales up 14% as a consequence of home and worldwide beneficial properties.

Abbott Laboratories expects earnings-per-share to vary from $5.05 to $5.25 for the 12 months.

Development Prospects

Over time, Abbott Laboratories has proven the potential to develop its adjusted earnings-per-share reliably. In 2013, Abbott Laboratories spun off AbbVie (ABBV), and each companies have carried out effectively since then.

Wanting forward, Abbott Laboratories has two main development prospects that may assist its enterprise to turn out to be more and more extra worthwhile over time to return.

The primary is the getting old inhabitants, each domestically and inside the US. In 2024, the share of the worldwide inhabitants that exceeded the age of 65 was 10%, double what it was within the Nineteen Seventies. This group is anticipated to quantity as a lot as 1.6 billion or 16% of the world’s inhabitants by 2050.

The corporate’s give attention to rising markets is the second broad tailwind that may profit Abbott Laboratories. That is notably true for its Branded Generic Prescription drugs section.

This section focuses on many nations that spend a really small proportion of their total GDP on healthcare, a price that’s anticipated to extend sooner or later.

The getting old home inhabitants mixed with the fairly low give attention to healthcare spending in rising market nations ought to depart Abbott Laboratories loads of room to develop for the foreseeable future.

We anticipate 7% annual EPS development over the subsequent 5 years for ABT.

Aggressive Benefits & Recession Efficiency

Abbott Laboratories’ aggressive benefit is twofold. The primary element is its exceptional model recognition amongst client medical merchandise, notably in its Vitamin section. Led by noteworthy merchandise just like the Guarantee meal substitute complement, Abbott Laboratories’ manufacturers enable its gross sales to face sturdy by way of even the worst financial recessions.

Abbott’s second aggressive benefit element is its give attention to analysis and growth. Its funding in analysis & growth reveals that the corporate is keen to play the lengthy recreation, constructing out its product pipeline and bettering its long-term enterprise development prospects.

As a big, diversified healthcare enterprise, Abbott Laboratories is very recession-resistant. The corporate really elevated its adjusted earnings-per-share throughout annually 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)

Remarkably, Abbott Laboratories managed to develop its earnings-per-share through the international monetary disaster – one of the vital economically tough time intervals on file. On the similar time, the corporate’s share depend elevated. Because of this Abbott Laboratories didn’t use share repurchases to develop earnings-per-share, they had been merely extra worthwhile throughout a tumultuous time.

We anticipate this recession-resistant Dividend Aristocrat to carry out equally effectively throughout future downturns within the enterprise atmosphere.

From a dividend perspective, Abbott Laboratories’ dividend additionally seems very secure. ABT has an anticipated dividend payout ratio barely beneath 50% for 2025.

Valuation & Anticipated Complete Returns

Abbott Laboratories is at the moment buying and selling at ~$133 per share. Utilizing the midpoint of the corporate’s steering for the 12 months offers the inventory a price-to-earnings ratio of 25.8.

Abbott Laboratories’ price-to-earnings ratio has typically hovered between 20 and 25 over the previous 5 years. The present valuation is above the excessive finish of this vary.

We really feel {that a} truthful price-to-earnings ratio of twenty-two is extra acceptable within the present atmosphere. If shares revert to our truthful worth estimate of twenty-two by 2030, then valuation can be a 3.2% drag on annual returns over this era.

The opposite main element of Abbott Laboratories’ future complete returns would be the firm’s earnings-per-share development. We anticipate this development to proceed, and traders can fairly anticipate 7% in annual adjusted earnings-per-share development transferring ahead.

Lastly, Abbott’s complete returns can be boosted by the corporate’s dividend funds. Abbott Laboratories now has a 53-year dividend development streak, preserving its Dividend King standing.

ABT inventory has a present dividend yield of 1.8%. General, Abbott Laboratories’ anticipated complete returns can be composed of:

7.0% earnings-per-share development
1.8% dividend yield
-3.2% a number of reversion

Complete anticipated annual returns are forecasted at 5.5% by way of 2030. It is a pretty low anticipated price of return as a result of inventory’s present overvaluation.

Last Ideas

Abbott Laboratories has many traits that make it an interesting dividend funding. Its recession-resistant enterprise mannequin permits it to proceed rising earnings-per-share by way of numerous financial environments. It additionally has a protracted historical past of steadily growing dividend funds.

That mentioned, we consider the inventory’s present valuation prevents it from providing sturdy return prospects within the coming years, so we price Abbott Laboratories a maintain proper now.

If you’re involved in discovering high-quality dividend development shares appropriate for long-term funding, the next Certain Dividend databases can be helpful:

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