3 Reasons to Buy This Dividend King After Its Steep Sell-Off

Abbott Laboratories (NYSE: ABT) announced its 2025 fourth-quarter and full-year results before the market opened on Thursday, Jan. 22, 2026. And its shares promptly plunged nearly 10%. As you probably figured out from that brief overview, investors didn't like the healthcare giant's Q4 update.

However, Abbott has been a favorite for many income investors. The company is a member of the Dividend Kings, an elite group of stocks that have increased their dividends for at least 50 consecutive years. Abbott recently increased its dividend for the 54th straight year.

I think the stock should remain a top pick for income investors. Here are three reasons to buy this Dividend King after its steep sell-off.

1. Investors' reaction was overdone

Abbott reported Q4 revenue of $11.5 billion, while Wall Street expected $11.8 billion. This miss was admittedly disappointing.

The company's nutrition segment is the main culprit. CEO Robert Ford acknowledged in the Q4 earnings call that the results "underscore a broader challenge." He said, "Higher manufacturing costs led to higher prices, which in turn are suppressing demand as consumers become increasingly more price-sensitive."

However, investors' reaction was overdone, in my opinion. It's important to put Abbott's Q4 results in context. The healthcare leader's adjusted diluted earnings per share (EPS) jumped 12% year over year, meeting analysts' estimates. Management began implementing changes to help turn things around in the nutrition business and expects a return to growth in the second half of 2026.

2. Growth should accelerate in 2026

Speaking of 2026, Abbott projects overall revenue growth will accelerate this year. The company provided full-year guidance of 6.5% to 7.5% organic sales growth, up from 5.5% in 2025. It also expects adjusted diluted EPS of $5.55 to $5.80. The midpoint of this range reflects 10% year-over-year growth.

Image source: Getty Images.

Abbott continues to have a highly diversified business with a long list of successful products. Ford stated in the earnings call, "I don't think that there is a company right now that's better positioned in terms of completeness of the portfolio than what we have." When it comes to the medtech and diagnostics markets, I think he's right.

3. A game-changing acquisition is on the way

The company's portfolio could soon be even better. Abbott expects to close its pending acquisition of Exact Sciences (NASDAQ: EXAS) in the second quarter of 2026.

Ford believes the deal will "add a whole new growth vertical" for Abbott. Again, I have to agree. Acquiring Exact Sciences could be a game-changer for the company, offering the opportunity to expand into early detection of multiple types of cancer.

Keith Speights 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.