History Says Abbott Stock Could More Than Double by 2036. Here’s Why I Just Added It to My Portfolio.

Abbott (NYSE:ABT) currently trades for less than $100 a share. A conservative base-case model suggests the healthcare stock could be worth around $210 per share a decade from now. The best part is that doubling doesn't require anything close to optimistic assumptions; it's grounded in Abbott's recent history.

This high upside potential from a low-risk, high-quality dividend stock is why I just added Abbott to my portfolio this week.

Image source: The Motley Fool.

A history lesson

In 2016, Abbott generated nearly $21 billion in sales and $2.20 per share of adjusted earnings. This year, the healthcare company expects to report about $47 billion in sales and $5.53 of earnings at the mid-point of its current guidance range. That's a 9.7% compound annual earnings-per-share growth rate over the past decade.

Acquisitions helped Abbott deliver a nearly double-digit compound annual earnings growth rate over the past decade. In 2017, it bought both St. Jude Medical and Alere for $25 billion and $5.8 billion, respectively. These deals enhanced its operations and earnings (both were accretive in the first full year). The company also bought Exact Sciences earlier this year for $21 billion, a move that is boosting its 2026 results.

Abbot's share price has followed its revenue and earnings higher. It's up 130% over the last 10 years (8.7% annualized total return). That doesn't include dividends. Add in Abbott's steadily rising dividend, and the total return with dividends reinvested is more than 175% (10.7% annualized). Abbott has increased its dividend for 54 consecutive years, qualifying it as a Dividend King (a company with 50 or more years of annual dividend increase).

The math to $210 (or more) by 2036

I considered several scenarios when evaluating Abbott for my portfolio. I settled on a base case in which Abbott Labs grows its earnings at a 8% compound annual rate over the next decade. I chose that more conservative rate because acquisitions played a meaningful role in driving growth over the past 10 years. Under this conservative scenario, Abbott's earnings would grow to about $11.93 per share by 2036. Assuming a 17.5x valuation multiple (Abbott currently trades at about 18x forward earnings), that would put its share price at around $210.

That doesn't include Abbott's dividend, which currently yields 2.5%, more than double the S&P 500's level of around 1%. The company would likely continue to grow that payout at a mid-to-high single-digit annual rate (it hiked its dividend by 6.8% this year and has grown it by 70% since 2020).

Why I just bought Abbott stock

Abbott fits perfectly with my current financial plan. I'm seeking more resilient, income-focused holdings to set me up for an early retirement if AI ever disrupts my job. Abbott checks every box. It provides durable, steadily rising dividend income backed by a diversified portfolio of healthcare technologies, including diagnostics, medical devices, nutritionals, and branded generic medicines. It's the exact type of defensive holding I'm seeking to provide more ballast.

Further, Abbott provides a strong defense without giving up any offensive upside. With a 2.5% dividend yield and earnings growing conservatively at 8% annually, Abbott could generate double-digit annual returns over the next 10 years. That strong return doesn't require any large acquisitions to boost its results. Meanwhile, faster acquisition-driven growth would position Abbott to generate even higher returns. For example, a 9%+ earnings growth rate with a slightly higher valuation multiple would push the stock price toward $250 by 2036.

I also like that the downside risk is low. The company does have risks, including integrating Exact Sciences and managing the heavier debt load from that all-cash deal. However, even if growth slowed and its valuation multiple continued to fall, Abbott should still be worth more in a decade than it is today while also providing a steadily rising income stream.

Abbott's history says it has a bright future

Abbott has historically grown its earnings at a nearly 10% compound annual rate over the last decade. It doesn't need to grow that fast in the future to deliver a very favorable outcome for shareholders, as 8% annual earnings-per-share growth could double its share price by 2036, with its steadily rising, high-yielding dividend adding to the total return. That's exactly the lower-risk, higher-upside investment I'm seeking to make these days, which is why I just added Abbott to my portfolio. I expect to build this position into a meaningful part of my financial independence plan.

Matt DiLallo has positions in Abbott Laboratories. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool has a disclosure policy.