Abbott is one of the biggest healthcare companies in the world. With over 400 consecutive quarterly dividend payouts and 53 years of consecutive dividend increases, it’s fair to say it’s one of the more popular dividend growth stocks around. But, it can be hard to picture what 50+ years of increasing dividends can do to a person or, indeed, how much growth it presents. So let’s talk about it.
Company Profile (ABT)
Abbott Laboratories is a global healthcare leader with a rich history of over 130 years. The company operates in over 160 countries worldwide and develops products and technologies to enhance human health and longetivity. Its segments include:
- Diagnostics: Develops and manufactures laboratory and point-of-care diagnostic tools. Products include the Alinity Diagnostics System family and the BinaxNOW COVID-19 rapid test.
- Medical Devices: The segment aims to address medical needs for cardiovascular conditions, neuromodulation, diabetes control, and similar conditions. Examples of its most successful product are the FreeStyle Libre 2 Continuous Glucose Monitors, which is touted as one of the, if not the best, Continuous Glucose Monitoring sensors in the world.
- Nutrition: This segment is a leader in pediatric and adult nutrition products. Its popular products—Similac, Pedialyte, Ensure, and Glucerna—can be found in drugstores and other medical facilities worldwide.
Dividend History
It’s no secret that Abbott Laboratories is committed to shareholder value. Its dividends pay like clockwork—January, April, July, and October—and has consistently initiated share buybacks resulting in of billions of dollars of improved shareholder value.
Here’s a snapshot of its dividend increase history:
| Year | Annual Dividend per Share | Percentage Increase |
| 2016 | $1.04 | 8.3% |
| 2017 | $1.06 | 1.9% |
| 2018 | $1.12 | 5.7% |
| 2019 | $1.28 | 14.3% |
| 2020 | $1.44 | 12.5% |
| 2021 | $1.80 | 25.0% |
| 2022 | $1.88 | 4.4% |
| 2023 | $2.04 | 8.5% |
| 2024 | $2.20 | 7.8% |
Abbott registered an 82.14% dividend growth rate in the last five years. Today, the company pays 59 cents per share quarterly, or $2.36 annually, which translates to a decent 2.08% yield.
The Value of Long-term Dividend Investing
Starting from 1988, Berkshire Hathaway, under the direction of Warren Buffett, made a significant investment in Coca-Cola. As of today, the firm has accumulated 400 million shares of the stock. With KO’s stock price at $63, that investment is worth more than $25 billion. But that’s not the most impressive part. With Coca-Cola’s dividend policy, Warren Buffet is set to earn $776 million in dividends (for FY2025) after the company’s latest increase.
That story spins a great tale of how dividend investing can work wonders for you in the long term. But, to be honest, I’ve found it a bit out of touch with reality.
For one, we ordinary folks don’t have millions of dollars to invest in dividend stocks. Many of us would have trouble producing even a fraction of that amount. Plus, most of us don’t have easy access to market research and decades of financial experience to make calls like that.
So, while investing billions of dollars, getting millions of shares, and receiving billions in dividends is an excellent tale for financial circles, it’s not exactly an attainable goal for the common investor.
But you know what’s attainable?
$180, or three shares of Abbott Laboratories stock.
The Story of Grace Elizabeth Groner
In 1935, Grace Elizabeth Groner, a secretary in Abbott Laboratories, bought three shares of ABT stock for $60 each. After more than forty years of working, Grace would eventually retire. She kept her three ABT stocks for that entire time, receiving and continuously reinvesting dividends. Her shares further multiplied through multiple stock splits from 1964 up to 1998.
Her retirement and, indeed, her life were frugal but practical. She lived in a one-room cottage (left to her by a relative), frequented bargain stores for her needs, and avoided luxuries and even necessities like cars (she had hers stolen, but she never bought a replacement.) By all accounts, she lived humbly and frugally, seeing to her basic needs and wanting nothing more.
However, after she died in 2010, the fruits of her Abbott investment came out when she established a foundation to support her hometown, Lake Forest, and its local academia at Lake Forest College. By 2010, her $180 three-share initial investment had grown to well over 100,000 shares and was valued at $7.2 million.
Today, the Grace Elizabeth Groner Foundation continues to support students of Lake Forest College through their education.
Through consistent dividend reinvestments and with the help of Abbott’s commitment to increasing dividends, Grace achieved something that most of us yearn for—financial freedom—in a realistic and very attainable way.
“No. 1 in Healthcare”
Based on historical returns, Abbott Laboratories has also been hailed as the best stock to buy in the healthcare sector.
Professor Hendrik Bessembinder published a study in July 2024 that dove into financial data from 1925 to 2023 to see which stocks offered the best returns.
In the study, he found that ABT generated a cumulative compound return of 7,803,730%. Or, as the study outlined, “$1 invested in Abbott in 1937 would result in $78,083 in 2023.” This reflects Grace Groner’s growth, and the timeline almost coincides. This ranked the stock as the top one investment in healthcare and the top eleven in the entire market. Now, those are statistics you can’t ignore.
Final Thoughts
Even without the stories and the deep dives, Abbott is an excellent investment opportunity at face value. The company offers decent dividends, consistent growth, great historical returns, and a significant presence in the healthcare market. So, if you’re planning on building a long-term portfolio, Abbott has definitely earned a place on it.
