How to Pick a Healthcare Stock That Can Weather Any Market
Key Points
Abbott Laboratories is a very diversified company, which can reduce some risks.
The medical products maker is a committed dividend payer, too, with a solid yield.
The company is growing organically and also via acquisitions and partnerships.
- 10 stocks we like better than Abbott Laboratories ›
These are times that can make an investor nervous. Our country is waging a war, while tariffs have disrupted the global economy, with some trade partnerships changing. With so much seemingly changing from month to month, it's fair to worry about the effect of all this on our stock portfolios and to seek stocks that are sturdy.
Then consider Abbott Laboratories (NYSE: ABT), which offers a lot to worried investors.
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Why Abbott?
Here are some reasons to consider investing in Abbott Labs:
- It's a dividend-paying stock, with a recent dividend yield of 2.8%. Better still, it has paid its shareholders for 399 quarters in a row -- which is almost 100 years! -- and it has upped its payout for 51 years in a row. Want more? Well, its payout ratio, the percentage of its earnings it pays out as dividends, was recently just 67%, leaving plenty of room for more increases. And dividends tend to be paid no matter what the economy is doing.
- Abbott has declared 399 consecutive quarterly dividends since 1924 and has increased the dividend payout for 54 consecutive years. Abbott is a member of the S&P 500 Dividend Aristocrats® Index, which tracks companies that have annually increased their dividend for 25 consecutive years. (Dividend Aristocrats® is a registered trademark of Standard & Poor’s Financial Services LLC.)
- It's growing. In its first quarter, revenue grewnearly 8% year over year, while earnings per share (EPS) grew by 6%. That's in part because of acquisitions, such as its recent purchase of Exact Sciences, which brings with it oncology diagnostics expertise.
- It's diversified. As management noted along with its first-quarter report, "Our cancer diagnostics business, medical devices portfolio and pipeline progress are among key growth drivers." This is valuable, because if one division falters, others can take up the slack.
- Its shares seem reasonably valued at recent levels. Its forward-looking price-to-earnings (P/E) ratio, for example, iw 16.6, well below its five-year average of 23.6, and its price-to-sales ratio is 3.5, below its average of 4.8.
Give the stock a closer look if you're intrigued.
Should you buy stock in Abbott Laboratories right now?
Before you buy stock in Abbott Laboratories, consider this:
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Selena Maranjian 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.
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