Abbott Laboratories: The Unrivaled Healthcare Stock for Consistent Long-Term Gains
Abbott Laboratories (NYSE: ABT) has emerged as the quintessential healthcare stock for investors seeking not just consistent, long-term growth but also impressive quarterly dividends. Renowned economist Hendrik Bessembinder’s latest research highlights Abbott as the top healthcare stock of all time.
Abbott’s Impressive Returns: A Historical Perspective
Founded in 1888 and headquartered in Green Oaks, Illinois, Abbott Laboratories has been a stalwart in the healthcare sector for 135 years. The company was ranked as the most profitable healthcare stock of all time and 11th overall in Bessembinder’s study. From March 1, 1937, to December 29, 2023, Abbott generated an astounding 7,803,730% in cumulative returns. To put this into perspective, a $100 investment in Abbott in 1937 would now be worth nearly $8 million.
Consistent Dividend Growth
Abbott isn’t just a top performer in stock returns; it’s also a dividend champion. The company has delivered dividend growth for 52 consecutive years up to 2023. Remarkably, the December quarter of 2023 marked Abbott’s 400th consecutive quarter of dividend payments since 1924. This consistent dividend payment has earned Abbott a place on the prestigious Dividend Aristocrat Index, a list of companies that have raised their dividend payouts for at least 25 consecutive years.
In its latest December 2023 announcement, Abbott raised its dividend by 7.8%, following an 8.5% increase the previous year. Historically, the company has raised its dividend by as much as 25% in recent years, suggesting that investors can anticipate another robust dividend hike before year-end.
Strong Financial Performance
Abbott’s recent financial results have been exemplary. For the second quarter, the company reported earnings per share (EPS) of $1.14, surpassing expectations. The medical devices segment primarily drove the revenue of $10.38 billion, with double-digit sales growth in diabetes care, electrophysiology, and structural heart segments. New products like Amplatzer® Amulet®, Navitor®, TriClip®, and AVEIR® also contributed to the strong performance. Consequently, the company’s board declared a quarterly dividend of $0.55 per share for Q2.
In light of these robust results, Abbott has updated its full-year revenue guidance to an organic growth range of 9.5%-10% and revised its adjusted EPS guidance to $4.61-$4.71, up from the previous range of $4.55-$4.70.
A Diversified Portfolio
Abbott’s broad portfolio includes diagnostics, medical devices, nutritional products, and branded generic medicines. The company markets popular nutrition products such as Similac, PediaSure, Glucerna, and Pedialyte. In the medical devices and diagnostics arena, notable products include the FreeStyle glucose monitoring system, MitraClip for transcatheter mitral valve repair (TMVr) therapy, the Alinity family of diagnostic systems, and the i-STAT 1 portable blood analysis system.
Strategic Acquisitions
Abbott has made several strategic acquisitions to bolster its presence in the healthcare sector. In 2017, it acquired Alere Diagnostics for $5.3 billion. More recently, in 2023, Abbott acquired Cardiovascular Systems Inc. for nearly $890 million.
Comparative Analysis
While Abbott has been a stellar performer, other companies have also delivered impressive returns. Altria Group Inc. (NYSE: MO) topped the list with the highest cumulative compound return of 265,528,900.62% and the highest annualized cumulative return of 16.29% from December 31, 1925, to December 29, 2023. Vulcan Materials Company (NYSE: VMC) and Kansas City Southern (NYSE: KSU) also ranked highly in terms of cumulative compound returns.
Notably, Nvidia (NASDAQ: NVDA) shareholders earned the highest annualized compound return of 33.38% among stocks with at least 20 years of return data.
Key Takeaways
- Abbott’s Historical Success: Abbott Laboratories has delivered unparalleled long-term returns and consistent dividend growth, making it an attractive option for investors.
- Financial Strength: The company’s strong quarterly earnings and robust revenue growth highlight its financial health and operational efficiency.
- Diversified Portfolio: Abbott’s broad range of products and strategic acquisitions strengthen its market position and growth potential.
- Comparative Performance: While Abbott is a top performer, other companies like Altria and Nvidia have also shown remarkable returns.
How This Affects You
Investing in Abbott Laboratories could be a wise decision for those seeking a reliable and profitable long-term investment in the healthcare sector. The company’s consistent dividend payments and robust financial performance offer both growth and income potential, making it a solid addition to any investment portfolio. Understanding these dynamics can help you make informed decisions that could significantly impact your financial future.