What Abbott actually does
Abbott is a health-care company founded in 1888 in Chicago and headquartered in Abbott Park, Illinois. It operates in four main areas: medical devices (including diabetes monitoring), diagnostics, nutrition (infant formula and adult nutrition) and established pharmaceuticals sold mainly outside the US.
Its research-based drug business was separated in 2013 as a new company, AbbVie, which is why the two names are often mentioned together.
How the business makes money
The mix of businesses matters. Devices and diagnostics are driven by technology and by testing demand, nutrition by consumer products and established pharmaceuticals by steady demand in emerging markets. Having several engines makes results less dependent on any single product.
Diagnostics, in particular, saw big swings around testing for COVID-19, which made earnings less predictable in recent years.
The dividend story
Abbott has increased its dividend every year for more than half a century, making it a Dividend King and an Aristocrat. It pays quarterly. The yield is modest, and the increases have been regular.
Part of its record is shared with AbbVie, which counts the years before the 2013 separation as well.
What to keep an eye on
- Product concentration. Some devices, such as glucose monitors, are very important to growth.
- Post-COVID diagnostics. Testing revenue has normalised, which affects comparisons.
- Litigation and recalls. Nutrition products and devices are heavily regulated.
- Competition. Rivals are active in diabetes and cardiovascular devices.
Quick take
Abbott is a diversified health-care company with a very long dividend record. Its balance of devices, diagnostics and nutrition gives it resilience.