Investment Opportunity: Long-Term Hold on Two Healthcare Stocks
In the dynamic world of healthcare, two prominent companies - Abbott Laboratories and AbbVie - have shown strong long-term growth prospects and dividend outlooks, albeit with distinct business focuses and recent developments.
### Abbott Laboratories
Abbott Laboratories, founding year 1888, is a leading healthcare company with a market cap of $240 billion. It has centred its business around medical devices, diagnostics, cardiovascular and diabetes care, and consumer nutrition products. Having spun off its pharmaceutical segment as AbbVie more than a decade ago, its growth is now more focused on innovative medical technologies and diagnostics. Analysts expect Abbott to continue growing its earnings, supporting sustained growth in the long term.
Abbott is a member of the Dividend Kings club, having raised its dividend annually for an impressive 53 consecutive years. Its current dividend yield is about 1.77%, with a payout ratio near 30.61%, indicating a conservative and sustainable dividend policy. Recent analyst upgrades and price target increases reflect confidence in its future performance and dividend sustainability.
### AbbVie
AbbVie, a spin-off from Abbott Laboratories in 2013, is a separate biopharmaceutical company with a market cap of around $328 billion. Despite losing U.S. exclusivity on its top-selling drug Humira in early 2023, AbbVie has shown resilience through heavy investment in R&D and strategic acquisitions. Its pipeline now includes strong successors like Rinvoq and Skyrizi, expected to generate combined sales of $31 billion by 2027, surpassing Humira’s previous peak sales of about $22 billion.
AbbVie has inherited and extended Abbott’s tradition of dividend increases since the 2013 spin-off, growing its dividend by an impressive 310% cumulatively. Its forward dividend yield stands at a relatively high 3.51%, reflecting both its strong cash flow generation and commitment to shareholder returns.
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### Summary Table
| Aspect | Abbott Laboratories | AbbVie | |----------------------|------------------------------------------|-------------------------------------------| | Business Focus | Medical devices, diagnostics, nutrition | Biopharmaceuticals, innovative drugs | | Market Cap (2025) | Under $42 billion | Around $328 billion | | Revenue (2024) | Under $42 billion | $56.3 billion | | Key Growth Drivers | Medical technology, diagnostics growth | Next-gen drugs (Rinvoq, Skyrizi) | | Dividend History | 53 consecutive years of increases | Dividend increased cumulatively 310% since 2013 spin-off | | Dividend Yield | About 1.77% | About 3.51% | | Dividend Payout Ratio| 30.61% | Healthy and sustainable |
Both companies demonstrate solid long-term growth potential and strong dividend outlooks, with Abbott providing steady dividend growth based on stable medical technology businesses, and AbbVie offering higher dividend yield and growth potential fueled by its strong pharmaceutical pipeline and resilience post-Humira. Investors seeking a balance of medical device innovation (Abbott) and biopharma blockbuster drugs (AbbVie) may consider owning both stocks for diversified exposure within the healthcare sector.
Investing in either Abbott Laboratories or AbbVie offers prospects for long-term growth, given their strong dividend outlooks. Financially, Abbott Laboratories, focusing on medical devices, diagnostics, and nutrition, has a growth trajectory supported by innovative medical technologies and diagnostics. On the other hand, AbbVie, primarily a biopharmaceutical company with a robust pipeline, features a higher dividend yield, particularly post-Humira, due to its next-generation drugs like Rinvoq and Skyrizi. Businesses looking to invest in a blend of medical device innovation (Abbott) and biopharma blockbuster drugs (AbbVie) might find virtue in diversifying their healthcare portfolio by including both stocks.
