Abbott Laboratories (ABT, Financial) closed higher on the New York Stock Exchange on Sept. 13 after the board of directors declared a cash quarterly dividend of 28 cents. The stock was up 0.2% at $68.6 in early trading on Friday.
The quarterly distribution is on par with the previous one.
The dividend will be paid to shareholders of the health care company on Nov. 15. To benefit, investors must be on the company’s record no later than Oct. 15. The ex-dividend date is Oct. 12.
Abbott Laboratories is a loyal dividend payer, distributing a portion of its free cash flow to shareholders for 35 years. Over that same period, it has increased its dividend 46 times.
If held constant over the next four quarters, the quarterly distribution will lead to a forward annual dividend of $1.12, yielding 1.7%, which is below the S&P 500 index's  current dividend yield of 1.76% and below the One-Year U.S. Treasury bond's yield of 2.49%.
Analysts expect 4% growth in the stock's market value, making Abbott Labs an appealing investment option. I would wait, however, for a pullback before adding to or establishing a position.Â
Abbott's fundamentals are good. The company has about $3 billion in cash on hand and securities and nearly $20 billion in debt. The interest coverage ratio of 3.32, however, indicates the company may have some trouble paying the interest expenses on outstanding debt. As of the most recent quarter, the company has $68.4 billion in total assets and $37.6 billion in total liabilities. The equity is worth about $30.6 billion.
In 2017, the company recorded $27.4 billion in revenue and generated $477 million in net income.
The company's portfolio is composed of products designed to treat a broad range of illnesses. Currently, Abbott is structured in four segments: Nutrition, Diagnostics, Established Pharmaceuticals and Medical Devices. In the second quarter, the Medical Devices segment accounted for 37.2% of total quarterly revenues of $7.767 billion; Nutrition represented 24%; Diagnostics contributed 24% and the Established Pharmaceuticals segment accounted for 14.5%.
Abbott Labs' stock is trading above the 200-, 100- and 50-day simple moving average lines. The share price has climbed 32% for the 52-weeks through Sept. 13 and is more than 30% off the 52-week low of $51.37 and near the 52-week high of $68.82.
The price book ratio is 3.95, above the industry median of 3.06, and the price-sales ratio is 4.08, versus the industry median of 3.15. The price-earnings ratio of 137.34 is well above the industry median of 30.17.
The average target price is $71.31 per share, which is approximately 4% upside from the current share price. The 14-day relative strength index is 72, meaning it is overbought.Â
Disclosure: I have no positions in any security mentioned in this article.
