Investing in high-quality dividend stocks is a great way to earn excellent returns over the long run. It’s even better to buy shares of attractive dividend payers on the dip. That’s what investors can do right now with Abbott Laboratories (ABT 1.47%). The healthcare giant has faced some challenges of late, sending the stock down 30% over the past year, as of writing. However, for investors focused on the long game, now is a great time to double down. Here’s why.
Image source: The Motley Fool.
A great company at an attractive price
Abbott Laboratories is experiencing slow top-line growth, particularly in its nutrition and diagnostics businesses. In the first quarter, the company posted comparable sales growth (excluding the impact of recent acquisitions, currency exchange, and other factors) of just 3.7% year over year to $11.2 billion. Abbott’s nutrition revenue declined 7.7% year over year, while diagnostics sales grew just 1.8%. One of Abbott Laboratories’ challenges will be to improve top-line growth.
Thankfully, the company seems capable of doing that. Its recent $21 billion acquisition of Exact Sciences, which it closed in the first quarter, brought exciting products, including Cologuard, a test for colorectal cancer, and a separate multicancer diagnostic test. There is a large opportunity here to build on Exact Sciences’ business, especially given that Abbott Laboratories’ boasts deep footprints in the healthcare sector, which can allow it to expand its reach beyond what Exact Sciences alone could.
Today’s Change
(-1.47%) $-1.33
Current Price
$89.46
Key Data Points
Market Cap
$156B
Day’s Range
$89.14 – $91.00
52wk Range
$89.14 – $139.06
Volume
13M
Avg Vol
12M
Gross Margin
52.84%
Dividend Yield
2.73%
Even beyond acquisitions, Abbott Laboratories’ business offers attractive growth avenues. One of the most important is the company’s FreeStyle Libre, a family of continuous glucose monitoring (CGM) devices that has been its biggest growth driver in recent years. Yet, the CGM market remains underpenetrated, and Abbott Laboratories has launched newer, over-the-counter CGM products, like the Lingo and the Libre Rio, in the U.S. These will help target populations that have historically not benefited from third-party CGM coverage as much as those with Type 1 diabetes. Abbott Laboratories should also continue innovating and launching better products, as it has done for a while. Meanwhile, the stock looks about as cheap as it has in years.
ABT PE Ratio (Forward) data by YCharts
Lastly, Abbott Laboratories has an outstanding dividend program. The company is a Dividend King. Those are corporations with 50 (or more) consecutive years of payout increases. Abbott Laboratories offers a decent forward dividend yield of 2.8%, which is well above the S&P 500‘s average of 1.1%. Given the volatility and uncertainty that broader markets and the economy have experienced of late, it makes sense to seek out a top dividend payer like Abbott Laboratories. Investors who buy the company’s shares at current levels and hold them for the long term, while reinvesting dividends, could see superior returns.