Saturday, February 18, 2012

Abbott Increases Dividend

Abbott Laboratories (ABT) announced it has raised it's quarterly dividend 6.3% to $.51 from $.48 per share.  This increase is the 40th straight year shareholders have received a raise, placing it in the prestigious dividend champions category of dividend growth stocks.  6.3% is a mediocre increase for ABT in my opinion, but nothing to sneeze at.  Any increase at all is welcome, it is a sign the company aligns itself with shareholders' interests. 

ABT is planning a spinoff in 2012.  It plans to seperate its pharmaceutical business from the rest of the company.  I currently am holding my ABT position, but am not looking to add additional shares until the the spinoff is complete.  I think I will hold both the new stocks, but will only add to the parent company.  I'm not into pure drug companies.

With the new increase, ABT pays an annual dividend of $2.04 which represents a yield of 3.62% based off the current price.  Honestly this is a pretty good entry yield, but like I said I'm going to wait until the direction of the company becomes clearer. The payout ratio is creeping up, it is now 67.8%; the p/e is also pretty high at 18.7.  More reasons to place my money elsewhere. I was lucky enough to pick up shares during the volatility madness of August 2011.  At the time, equities were getting hammered and huge market swings were a daily occurence.  I saw an opportunity and managed to get a yield over 4% at the time.  I believe in dividend growth investing, even during times of extreme distress.  I don't know if that makes me smart or it's just dumb luck.  So far so good, either way I'll take it.

Cheers to you ABT.  40 straight years is an impressive feat.

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