Why Wall Street Is Becoming Even More Bullish About This Dividend King

A Dividend King is a company that's raised its dividend for at least 50 years consecutively. Abbott Laboratories (NYSE: ABT), for example, is one such company, having raised its dividend for 54 straight years. But that's not really why Wall Street is bullish on the stock. It's that Abbott is proving it can increases earnings faster than expected, thanks to its Medical Devices segment picking up steam. That's great news for income investors.

Image source: Getty Images.

Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

Why all the excitement around Abbott Laboratories

Abbott's second-quarter 2026 earnings gave investors a good reason to be bullish. Sales rose 13% to about $12.6 billion, while adjusted earnings per share (EPS) rose to $1.31. The healthcare company also raised full-year adjusted EPS forecast to $5.45 to $5.60, while keeping comparable sales growth projections at 6.5% to 7.5%.

You can see the result in recent analyst ratings and targets. Based on the latest analyst data, Abbott has 21 "buy" ratings and one "hold" among 29 analysts, with mean-to-high target prices of $121.33 to $143. TD Cowen lifted its target to $135 from $115, Citi raised its target to $125 from $112, and Wolfe Research upgraded Abbott to "outperform" with a $130 target.

The real question is whether its businesses can sustain earnings growth for years to come.

The Medical Devices segment is reshaping Abbott's growth story

Abbott's Medical Devices segment is becoming its main growth story. The segment grew 8.4% on a comparable basis and generated almost $6 billion of second-quarter sales, led by electrophysiology.

The diabetes business is another bright spot, with continuous glucose monitor sales rising during the quarter. The rollout of Libre Duo, which adds ketone monitoring, gives Abbott another product that could help extend the Libre franchise.

Then there's cancer diagnostics. Abbott closed its $21 billion acquisition of Exact Sciences in March, adding Cologuard and expanding its presence in cancer screening. The deal should pay off over time, though it will weigh on near-term earnings before expected cost savings kick in.

So the next logical question would be: Can all this growth translate into stronger earnings and cash flow to support its dividends?

Why the dividend still hinges on earnings growth

Abbott's record of paying dividends should give income investors a reason to smile. The company has raised its dividend for 54 consecutive years, while its operating cash flow of $3.8 billion in the first half of 2026 continues to support its payouts.

But here's the challenge: Not every part of Abbott is growing at the same pace. Its Nutrition and Rapid and Molecular Diagnostics segments declined in the second quarter, leaving faster-growing areas such as Medical Devices to carry more of the burden of driving the company's overall earnings.

This matters because Abbott's stock isn't cheap. It's trading at about 33 times earnings, which already prices in stronger future gains. In other words, there's less room for error if growth or its execution falls short.

What this growth outlook means for income investors

So, why is Wall Street bullish on Abbott? Put simply, it's because of the growth outlook. Medical Devices is gaining momentum, Libre keeps expanding its reach, and Exact Sciences opens up a new source of growth through cancer screening. All together, these segments offer Abbott more opportunities to increase its earnings and, by extension, its dividend.

For anyone seeking a mix of income and growth, Abbott has become a more compelling income option. Yes, the stock trades at a valuation that already reflects some optimism. However, if Abbott's strongest businesses continue to deliver, Wall Street's bullish call could prove correct.

Citigroup is an advertising partner of Motley Fool Money. 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.