Abbott Laboratories (NYSE:ABT) is up 17% up so far this year and is beginning to look more like its old self. From early 2011 to the middle of 2015, ABT stock expanded from just $22 per share to over $50. Since that high, Abbott has been going sideways. The current run leaves Abbott at its highest point since the mid-2015 peak.
While some analysts believe Abbott stock is going to cool-off because of its recent run, I believe in its prospects going forward.
Abbott has an impressively diverse portfolio, solid growth on tap and an enviable dividend history.
Here are three reasons why you should still pursue Abbott Laboratories as a stock to buy, even with the gains it’s already booked this year.
ABT Has Strong Sales Growth
Abbott has a wide-ranging healthcare portfolio full of names consumers and medical experts alike are quite familiar with. Heard of Pedialyte and Pediasure? That’s Abbott. Need generic pharmaceuticals for hypothyroidism or Ménière’s disease? Abbott. Need a vaccine for the flu? Abbott. That strong portfolio is one driver of growth for the company.
While earnings have shrunk by 15% annually over the last half-decade, a double-digit annual expansion is expected for the five years looking forward. Sales growth is in part to thank — this year, sales are expected to expand by 25%.
Abbott Is Acquisition Savvy
That sales growth is in part thanks to Abbott’s recent acquisition of St. Jude Medical, a medical device company that further rounds out the healthcare giant’s portfolio. According to the company’s most recent earnings release, Abbott now holds the first or second positions across several cardiovascular device areas.
Abbott also recently announced that it will not follow through on its acquisition of Alere. I like the fact that Abbott is willing to pivot in the face of what it sees as eroding value, and believe certainty around the acquisition (okay, well, the lack thereof) is good for investor morale.
ABT Stock Dividend
In addition to offering organic growth, Abbott also rewards loyal investors with a dividend. The company has paid a dividend for 373 straight quarters — a streak that dates back almost a century! On top of that, it’s increased the payout for 45 straight years.
As the company noted on its website, that makes Abbott a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for 25 consecutive years.
That gives ABT stock a yield north of 2.3% even in the wake of its recent run. You can bet that yield will grow with more increases.
Abbott stock’s run so far this year is a solid base for further gains. While the 2015 peak may serve as resistance down the line, I think it will be easy climb until that point.
Hilary Kramer is the editor of GameChangers, Breakout Stocks, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.