Abbott Laboratories: Should ABT Stock Be Owned Forever? Income Investors 2017-07-05 15:28:34 Abbott LaboratoriesABT stockNYSE:ABTAbbott stockdividend growth stocklong-term dividend stockS&P dividend aristocratdividend stock to own forever Abbott Laboratories (NYSE:ABT) stock, part of the S&P 500 Dividend Aristocrat Index should be considered to be owned forever for its income and dividend growth profile. Abbott Stock,Dividend Stocks,News https://www.incomeinvestors.com/wp-content/uploads/2017/07/ABT-Offers-Both-Growth-and-Income-for-Investors-150x150.jpg

Abbott Laboratories: Should ABT Stock Be Owned Forever?

ABT Offers Both Growth and Income for Investors 

Abbott Laboratories (NYSE:ABT) stock is a long-term dividend stock that may have a place in your portfolio forever. Let me explain why.

As I have said numerous times in these pages, when making any investment decision, consider a company’s past, present, and future. The past is beneficial because it will provide insight to how the company treats its shareholders, including the dividend. The present matters because that’s when the investment is being made and will determine if it makes sense for your portfolio. Your investment goals should match the current goals of the company. Lastly, the future will help determine if the invested capital could see upside, and if the dividend can continue.

All this said, let’s take a look at why ABT stock should possibly be owned forever.

The Past

Abbot stock is a dividend growth stock that is part of the S&P 500 Dividend Aristocrat Index, which isn’t something that happens overnight. To be part of the index, Abbott has achieved the minimum 25 straight years of dividend hikes, in addition to being a Fortune 500 country on a major U.S. trading exchange.

Based on the size of the company, Abbott would be ranked in the top 150 companies that trade on the major exchanges. Its dividend has seen an increase for 44 straight years and is reviewed each December. Just to get a small glimpse of the dividend growth over the past five years of this long-term dividend stock, here is a table with all the details:

Ex-Dividend Date
Paid Per Share
Change
Declaration Date
Record Date Payment Date
July 12, 2017 $0.27 N/A June 09, 2017 July 14, 2017 August 15, 2017
April 11, 2017 $0.27 N/A February 17, 2017 April 14, 2017 May 15, 2017
January 11, 2017 $0.27 1.9% December 09, 2016 January 13, 2017 February 15, 2017
October 12, 2016 $0.26 N/A September 15, 2016 October 14, 2016 November 15, 2016
July 13, 2016 $0.26 N/A June 10, 2016 July 15, 2016 August 15, 2016
April 13, 2016 $0.26 N/A 2/19, 2016 April 15, 2016 May 16, 2016
January 13, 2016 $0.26 8.3% December 11, 2015 January 15, 2016 February 16, 2016
October 13, 2015 $0.24 N/A September 17, 2015 October 15, 2015 November 15, 2015
July 13, 2015 $0.24 N/A June 12, 2015 July 15, 2015 August 15, 2015
April 13, 2015 $0.24 N/A February 20, 2015 April 15, 2015 May 15, 2015
January 13, 2015 $0.24 9.1% December 12, 2014 January 15, 2015 February 13, 2015
October 10, 2014 $0.22 N/A September 11, 2014 October 15, 2014 November 15, 2014
July 11, 2014 $0.22 N/A June 13, 2014 July 15, 2014 August 15, 2014
April 11, 2014 $0.22 N/A February 21, 2014 April 15, 2014 May 15, 2014
January 13, 2014 $0.22 57.1% October 16, 2013 January 15, 2014 February 15, 2014
October 10, 2013 $0.14 N/A September 12, 2013 October 15, 2013 November 15, 2013
July 11, 2013 $0.14 N/A June 14, 2013 July 15, 2013 August 15, 2013
April 11, 2013 $0.14 N/A 2/15, 2013 April 15, 2013 May 15, 2013
January 11, 2013 $0.54 5.9% December 14, 2012 January 15, 2013 February 15, 2013
October 11, 2012 $0.51 N/A September 13, 2012 October 15, 2012 November 15, 2012
July 11, 2012 $0.51 N/A June 08, 2012 July 13, 2012 August 15, 2012
April 11, 2012 $0.51 6.3% February 17, 2012 April 13, 2012 May 15, 2012
January 11, 2012 $0.48 N/A December 09, 2011 January 13, 2012 February 15, 2012
October 12, 2011 $0.48 N/A September 15, 2011 October 14, 2011 November 15, 2011
June 13, 2011 $0.48 N/A June 10, 2011 June 15, 2011 August 15, 2011

The dividend growth in one year was as high as 57%. Also note that, toward the bottom of the table, the dividend goes from $0.54 per share to $0.14. This was not a dividend cut; rather, the company split into Abbott Laboratories and AbbVie Inc (NYSE:ABBV). Shareholders at the time received one share in each company.

Abbott Labrotaries

Open Grid Scheduler/Flickr

The Present 

Following the split, Abbott concentrated on nutritional products, diagnostics, established pharmaceutical goods, and medical devices. The company generates approximately half of its revenue from foreign markets, providing geographic diversification. For instance, if one country generates a year-over-year revenue decline, there could be another country providing a positive benefit that offsets the negative effect.

Another benefit of having revenue from around the world is the possible gains from currency exchange. Abbott reports its revenue in U.S. dollars, which can mean gains or losses based on international exchange rates.

ABT stock pays out a dividend on a quarterly basis. The current dividend yield from Abbott stock is 2.18%.

The Future

In January of this year, ABT announced the completion of its acquisition of St. Jude Medical, Inc. With the deal, Abbott will be one of the leading medical device companies in the world. The transaction will also help the company to grow in new areas at a faster rate than previously expected. (Source: “Abbott Completes The Acquisition Of St. Jude Medical,.”Abbott Laboratories, January 4, 2017.)

Since a large company is being acquired, it should take about a year or two for St. Jude to be fit into Abbott’s ecosystem. Once it has, the reduced operating costs of the combined business should help margins. What’s more, any overlap in assets will increase the company’s market share dramatically. And if that wasn’t enough, assets do not fit Abbott’s growth profile could be sold off for extra cash.

The revenue from the current assets is very constant. Also, the recent acquisition of St. Jude should help to generate higher revenue. (Source: “Abbott Laboratories,.” MarketWatch, last accessed June 30,2017.)

Also Read:

Abbott Laboratories: Is ABT Stock a Top Dividend Growth Stock?

The Top 10 Dividend Aristocrat Stocks for High Yields

Final Thoughts About ABT Stock

Actions speak louder than words and, based on those by Abbott’s administration team, they truly are focused on growth. The stock price has increased, as have profits and the dividend, further supporting this notion.

Even though there have been several shifts in leadership, the culture of the company has remained the same. This is why ABT stock should be considered a long-term dividend stock for permanent ownership.

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