Choosing the right dividend stock isn’t just about chasing the highest yields. The best dividend stocks are often the ones that quietly raise their payouts year after year while continuing to grow the underlying business. This is precisely why Abbott Laboratories (ABT) has been a favorite among income-seeking investors. The healthcare giant has a five-decade track record of dividend increases, earning a spot among the market's prestigious Dividend Kings.
Despite another strong quarter where it beats consensus forecasts, ABT stock is down 19% year-to-date (YTD), trailing the S&P 500 Index ($SPX). But this dip could be a great opportunity for long-term dividend investors to grab one of the safest income stocks.
More Yield, Less Trap: Sign up free to get Barchart’s daily Dividend Investor newsletter straight to your inbox.
www.barchart.com A Business That Isn't Relying on Just One Success Story to Support Its Dividends
Abbott is not only a Dividend King with a 55-year track record of dividend hikes, but it also offers a forward dividend yield of 2.5%, higher than the healthcare sector average. The sole reason Abbott has been able to consistently pay and increase dividends is its diversified healthcare business. Many healthcare companies rely on the success of one blockbuster drug or a single product category. But Abbott Labs operates through four key segments—medical devices, diagnostics, nutrition, and established pharmaceuticals.
These multiple revenue streams led to another strong quarter where it beat Wall Street’s estimates for both the top line and the bottom line. In the second quarter, total sales increased 13% year-over-year (YoY) to $12.6 billion, higher than the forecasted revenue of $12.52 billion. Similarly, adjusted EPS of $1.31 came in higher than the forecast of $1.28. Despite a challenging macroeconomic environment, diagnostic testing volumes remain strong across both the U.S. and international markets. Notably, its U.S. core laboratory business grew 7.5%. As diagnostic tests influence around 70% of healthcare decisions, this testing volume growth reflects the strength of underlying healthcare demand.
Medical devices are another strong segment that saw device sales climb by 8.5% in Q2. The strength was evident across cardiovascular products, diabetes care, heart failure therapies, rhythm management devices, and electrophysiology. Electrophysiology has emerged as one of the most rapidly expanding segments within cardiovascular care. Abbott introduced its next-generation Volt pulsed field ablation catheter in the U.S. and expects a broader commercial rollout during the third quarter. Internationally, the company's Volt and TactiFlex Duo products have already grown 20% in Europe. Hence, management is now confident of gaining a strong market share in the second half of the year. Meanwhile, rhythm management sales increased 9.5%, while heart failure products also grew 9%.
In diabetes care, continuous glucose monitoring sales rose to $2 billion, up 9.5% YoY. Additionally, the company has now received European approval for Libre Duo, the world's first wearable sensor capable of monitoring both glucose and ketone levels simultaneously. The device is designed to help patients detect rising ketone levels before diabetic ketoacidosis develops. Furthermore, the company’s Established Pharmaceuticals Division (EPD), which focuses primarily on branded generic medicines sold across emerging markets, saw sales increase by 9% in Q2. Rather than depending on a single blockbuster device, Abbott continues expanding across several rapidly growing medical device segments.
Following the strong quarter, Abbott raised its full-year EPS guidance from prior levels to a range between $5.45 and $5.60, with comparable sales increasing by 6.5% to 7.5%. Meanwhile, analysts now forecast earnings growth of 6.9% for the full year, with EPS increasing by 10.1% in 2027. For dividend investors, this matters because consistent earnings growth is ultimately what funds consistent dividend increases. This will allow the company to sustain its forward dividend payout ratio of 45.6%.
Why ABT Remains the Safest Income Stock to Own Now
“Dividend King” is not a title that Abbott Labs earned overnight. It took years of consistent action to maintain business stability amid recessions, changing industry trends, inflationary periods, and evolving consumer behavior. Its diversified business model, steady revenue and earnings growth, and a pipeline filled with new products expected to support future expansion will continue to support its payouts. Abbott’s Q2 shows that the company is well positioned to maintain its reputation as one of the safest income stocks to own now.
This is why on Wall Street, ABT stock holds a consensus “Strong Buy.” Out of 29 analysts covering the stock, 20 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and seven have a “Hold” rating. Analysts have given the stock an average target price of $117.11, indicating a roughly 15% increase from current levels. The high price estimate of $143 implies a potential upside of 40% over the next 12 months.
www.barchart.com On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
This Dividend King Could Be One of the Safest Stocks to Own Right Now Nvidia Turns to a Japanese Giant to Solve the Power Botteneck. What That Means for NVDA Stock. AMD Stock Alert: What to Know as Microsoft Joins AMD's Growing Helios Customer List The Number Tesla Stock Bulls Are Really Waiting for This Earnings Season Has Nothing to Do With Cars