Success in business is a challenging endeavor, with most new ventures failing to last more than a decade. However, there are a few select companies that not only survive but thrive for several decades, and even fewer that maintain a healthy, growing dividend program throughout long periods. These companies are considered incredibly strong and are worth considering for investment purposes.
Two such companies that stand out in the healthcare industry are Abbott Laboratories (NYSE: ABT) and Johnson & Johnson (NYSE: JNJ). These healthcare giants have established themselves as passive income machines that are worth holding onto for the long term.
Abbott Laboratories, a medical device specialist, has an impressive track record of raising its payouts for more than five decades. With a streak of 51 consecutive annual increases, Abbott is recognized as a Dividend King. The company’s success can be attributed to its steady, reliable, and predictable business model. Physicians regularly use and prescribe Abbott’s extensive portfolio of medical devices and diagnostic solutions for various conditions, ranging from benign to life-threatening. This consistent demand for its products has contributed to Abbott’s long-term success.
Moreover, Abbott continues to innovate and secure regulatory clearances for new medical devices, further solidifying its position in the market. The company’s recent wins include over-the-counter continuous glucose monitoring devices and a leadless pacemaker, demonstrating its commitment to innovation and growth.
Financially, Abbott has shown strong results, with sales growing by 4.9% year over year in the third quarter. The company’s diabetes care segment, a key growth driver, reported a sales increase of 17.1% compared to the previous year. With a cash payout ratio of just over 65% and a forward yield of over 1.9%, Abbott is well-positioned to continue increasing its dividends in the future.
On the other hand, Johnson & Johnson is another healthcare leader that has been rewarding shareholders for over six decades. As a Dividend King with 62 consecutive years of dividend increases, Johnson & Johnson has established itself as a reliable investment option. Despite facing regulatory challenges, the company has a history of navigating such issues successfully and delivering consistent financial results.
In the third quarter, Johnson & Johnson reported a 5.2% year-over-year increase in net sales, driven by growth in its pharmaceutical portfolio and medical devices unit. The company’s deep pipeline of ongoing programs and consistent regulatory wins further support its long-term growth prospects. Additionally, Johnson & Johnson boasts a higher credit rating than the U.S. government, highlighting its strong balance sheet and financial stability.
With a forward yield of around 3% and a cash payout ratio of over 58%, Johnson & Johnson offers a compelling dividend opportunity for investors. Despite regulatory challenges, the company’s consistent performance and diversified business model make it a solid choice for long-term investors.
In conclusion, both Abbott Laboratories and Johnson & Johnson are strong contenders for investors seeking reliable dividend stocks with long-term growth potential. These healthcare giants have demonstrated their ability to weather challenges and deliver consistent returns to shareholders. By carefully considering the strengths and growth prospects of these companies, investors can make informed decisions about their investment portfolios.
