Dividend Increase: Abbott (ABT) 2018

Abbott Labs is a large diversified manufactured of health, pharmaceutical, and medical devices included such brands a Pediasure, EAS, Similac, Ibuprofen. ABT has announced their 2018 dividend increase of $0.015, bringing the quarterly dividend to $0.28 from $0.265. This represents a 5.66% increase for the year.

This increase comes ahead of my $0.005 expected increase. The current dividend yield on ABT sits at 1.97% based on a price of $56.95.

The dividend increase brings the streak of continuous increases to 46 years straight, and the continuous dividend payment streak stands at 94 years.

ABT Dividend History:

I want to take a look at the ABT dividend a few ways, since there was the spinoff of ABBV back in 2013.

This first chart shows the ABT dividend history from 2005-2018, adjusted for the spinoff of ABBV. When you look at the change in the dividend from 2012 to 2013, this was not a decrease that occurred. Shareholders of ABT received shares in ABBV as a result of the spin off, and ABBV paid a dividend. So you got a little increase in your dividend income as a result of the spinoff, just between 2 companies. So yes, ABT has a 46 year dividend increase streak and I’ll show you that in a moment. To calculate the average growth on the dividend, I show a couple of different ways of calculating those figures. You’ll largely want to ignore those figures, since the spinoff adds some complications. This chart is useful for looking at the average growth on the dividend of ABT from 2005-2012

Lets look at what happened in 2013, when ABBV was spun off from ABT.

The above chart shows what happened to the ABT dividend in 2013, a large portion of the dividend payment fell under ABBV.

To make your life simple, I took the time to combine the data of ABT and ABBV.

The above chart combines the dividends of both ABT and ABBV, as if the spinoff never occurred in 2013. For someone that was a long term shareholder of ABT, and kept their shares of ABBV, I think this represents the best true growth in the dividend of ABT. Here you see that average growth of the quarterly dividend from 2005-2018 is 10.41% (arithmetic) and the annual payout amount sits at 10.52%. Your dividend income during that 13 year time frame has grown a total of 260% or a little more than tripled. Not bad.

ABT vs S&P500

Last year I wrote about ABT having a disappointing year, however it was a good time to get in low on a slow grower.  It paid off.  Things really turned around in 2017 for the stock and things are back to normal.

ABT Key Data:

Market Cap: $99.09 Billion

Beta: 1.64

PE Ratio: 45.95

Dividend Yield: 1.97%

Payout Ratio: 87.92%

Profit Margin: 8.37%

Total Cash: $11.2 Billion

Total Debt: $24.08 Billion

The financials have improved significantly from a year ago.  Market value is much higher with the run up, the payout ratio is below 100% but still a bit high for my taste.  Margins are still slim., PE is much higher due to the run in stock price.

Conclusion

I have mixed feeling on ABT today from a year ago.  Am I selling? No, I’m in for the long haul.  However, a new investor should look elsewhere.  I still think it’s spinoff, ABBV looks more interesting in comparison.

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