This Dividend King With a 54-Year Dividend Streak Is Down 13% YTD. Time to Buy the Dip?

<p>Abbott Laboratories (ABT) stock has slipped roughly 13% year-to-date, a pullback that has caught the attention of income-focused investors. The healthcare giant has a record of more than five decades of dividend growth and continues to post steady business expansion across several segments. With a forward dividend yield of about 2.2%, compared to the healthcare sector average of roughly 1.6%, Abbott may be appealing to passive income investors looking for stability in this volatile market.</p>
<p>Valued at roughly $190 billion, Abbott Labs is a global healthcare company that develops and sells medical devices, diagnostic tests, nutrition products, and branded generic medicines used to diagnose, monitor, and treat a wide range of health conditions. These diversified business segments help stabilize earnings through different economic cycles, allowing Abbott to pay out dividends.</p>
<p>Abbott belongs to an elite group of companies known as the Dividend Kings. These are companies in the S&amp;P 500 Index ($SPX) that have increased their dividends for at least 50 consecutive years. Last year, the company increased its quarterly dividend by 6.8% to $0.63 per share, which puts Abbott’s streak at 54 straight years of dividend increases. This marks its “408th consecutive quarterly dividend since 1924," highlighting its long-term financial stability and commitment to returning cash to shareholders. A higher yield often attracts income investors. But when that yield is accompanied by regular dividend increases, the case becomes much stronger.</p>
<p>Another important factor investors consider while choosing a dividend stock is the sustainability of the payouts. Abbott’s payout ratio of about 40.3% suggests the dividend remains well supported by earnings. That gives the company plenty of room to continue investing in innovation while continuing its long history of dividend increases.</p>
<p>Earnings Growth Despite Market Challenges</p>
<p>Abbott’s stock has faced pressure as pandemic-related diagnostic revenue continues to normalize. Diagnostic sales growth has been impacted by the expected decline in Covid-19 testing demand. However, the company’s core diagnostic business continues to grow. Another challenge has been the nutrition segment, where higher manufacturing costs and price increases have weighed on consumer demand. Abbott noted that rising commodity costs pushed up prices, which in turn slowed volume growth in the business.</p>
<p>However, management is already addressing the issue by introducing new products and employing promotional techniques to restore volume growth over time. Abbott continues to expand in high-growth areas such as cardiovascular devices, diabetes care, and structural heart treatments, which might lead to consistent earnings growth over time.</p>
<p>In the most recent fourth quarter, Abbott reported sales growth of 3.8%, excluding Covid testing revenue, reflecting ongoing normalization after the pandemic. Medical device sales grew 10.5%, supported by strong demand for cardiovascular technologies and diabetes care products. Abbott’s continuous glucose monitoring (CGM) business continues to expand rapidly, with sales exceeding $7.5 billion in 2025. It marked the third-straight year of growth of more than $1 billion annually. Other device segments are also seeing strong demand, including structural heart devices such as Navitor, Triclip, and MitraClip, all of which posted double-digit growth. Plus, Abbott’s electrophysiology business expanded across both U.S. and international markets.</p>
<p>The company's rhythm management sales increased by 10% year-over-year, driven by high acceptance of the Aveir leadless pacemaker. Management believes that the global rhythm management market, which is expected to be worth roughly $10 billion, offers significant long-term growth opportunities.</p>
<p>Adjusted earnings per share (EPS) grew 12% year-over-year to $1.50 per share in Q4, and the company expects about 10% earnings growth in 2026 at the midpoint of its guidance of $5.55 to $5.80 per share. Abbott also expects organic revenue growth of 6.5% to 7.5% in 2026, driven by new product launches and sustained expansion in medical equipment and diagnostics.</p>
<p>Healthcare is a defensive sector. No matter the economic scenario, people will fall sick and demand for healthcare products will continue to rise.</p>
<p>What Does Wall Street Say About ABT Stock?</p>
<p>Overall, analysts have rated ABT stock a “Strong Buy.” Out of 28 analysts covering the stock, 20 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and six have a “Hold” rating.</p>
<p>Analysts have given the stock an average target price of $134.21, indicating a roughly 24% increase from current levels. The high price estimate of $158 implies potential upside of 46% over the next 12 months.</p>
<p>The Bottom Line: Time to Buy?</p>
<p>ABT stock’s 13% dip so far this year may reflect short-term headwinds such as fading Covid-19 testing revenue and challenges in its nutrition segment. However, the company's fundamentals remain strong, supported by rising demand for medical devices, diagnostics, and diabetes management products.</p>
<p>With a 54-year dividend growth streak, a forward yield of about 2.2%, and a manageable payout ratio of 40.3%, Abbott continues to stand out as one of the most reliable dividend payers in the healthcare sector. For investors seeking stable income in this volatile market, this Dividend King’s recent dip could present a compelling buying opportunity.</p>
<p>On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com</p>