If a Stock Market Crash Is Coming, Investors Will Want to Own This Dividend King

With doubts around geopolitical issues combined with the stock market trading near record highs, it's natural to wonder whether a painful sell-off is overdue. If it is, Abbott Laboratories (NYSE: ABT) could be one of the best dividend stocks to own through the storm. Abbott is a Dividend King, a company that has increased its dividend for at least 50 consecutive years. In Abbott's case, it has raised its dividend for the past 54 consecutive years.

If the market crashes, Abbott could provide investors with a stable income stream, helping to soften the blow as they wait for a recovery.

The bigger question now is whether Abbott can keep it going.

Image source: Getty Images.

Abbott's dividend looks sustainable, even in a slowdown

In the second quarter, the company reported sales of $12.6 billion, up 13% year over year, while adjusted diluted earnings per share (EPS) came in at $1.31, beating Wall Street expectations. Management is confident that momentum can continue, as the company raised its full-year adjusted EPS forecast to between $5.45 and $5.60 per share.

Meanwhile, Abbott's dividend payout ratio is about 46%, meaning the company pays out less than half of its earnings as dividends. For dividend investors, that means Abbott earns more than enough to keep paying shareholders while still leaving room to reinvest in the business. And the more the business grows, the more it can support future dividend increases.

In fact, Abbott returned $2.1 billion to shareholders in the second quarter alone through a combination of share repurchases and dividends. Today, the stock's forward dividend yield is roughly 2.3%.

So, can Abbott keep increasing its dividends?

New products and a major deal could lift growth in 2026

Management believes sales and earnings will accelerate in the second half of 2026, creating a favorable setup for continued dividend increases. Abbott's medical devices business has been one of its bright spots.

The segment is seeing solid growth thanks to the U.S. launch of the Volt PFA system and the international rollout of Volt and TactiFlex Duo, devices used to treat certain heart conditions.

But perhaps the biggest catalyst this year was Abbott's $21 billion acquisition of Exact Sciences. With the deal, Abbott is expanding into the fast-growing cancer diagnostics market. Granted, the acquisition closed only in March, so there is still plenty of runway ahead, especially as the new business contributes more to earnings.

Investors are already seeing promising signs that this investment is paying off. Revenue in Abbott's cancer diagnostics segment grew 13.3% in the second quarter, driven by precision oncology, international growth, and Cologuard, a noninvasive colorectal cancer screening test.

Looking ahead, this segment is well-positioned to deliver stronger growth in the second half of the year, especially as Abbott ramps up newly launched tests, care gap programs, and overseas expansion.

So, what do analysts think about Abbott stock?

Should dividend investors consider buying Abbott now?

For dividend investors who own Abbott, the appeal is a compelling combination of income and stability. The company has raised its dividend for more than five decades, and its latest results prove that earnings and cash flow can support future payouts.

At the same time, Abbott's medical devices and cancer diagnostics businesses provide clear avenues for growth. If those segments continue to expand and generate cash, they could give Abbott an even stronger cushion to maintain and potentially raise its dividend, even if the broader market stumbles.

Wall Street appears bullish, with analyst offering "strong buy" rating on average. If a crash happens, investors will likely want holdings that can keep paying them while they wait it out, and Abbott Laboratories fits that profile.

Rick Orford has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool has a disclosure policy.