3 Medical Product Stocks With Solid Dividend Yield: ABT & Others
The Zacks Medical - Products industry is suffering from headwinds like raging inflation, higher interest rates, supply-chain disruptions and high operating costs. These factors are likely to hurt the margin for the industry players.
Amid these ongoing headwinds, the industry has declined 8.8% until Sep 28, underperforming the S&P 500 Index’s 12.5% gain and the broader Zacks Medical sector’s 7.6% decline.
Owing to the rising market volatility, it would be a wise decision to focus on some dividend-paying companies like Abbott Laboratories ABT, Koninklijke Philips PHG and Smith & Nephew SNATS SNN from the Medical - Products industry to create a steady income source. These companies have consistently announced dividend hikes, thus highlighting their pro-shareholder stance.
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, they offer downside protection with a consistent rise in payouts.
Additionally, these companies have superior fundamentals like a sustainable business model, a long track of profitability, good liquidity, a strong balance sheet and some value characteristics.
3 Medical Products Stocks to Embrace Now
In order to choose some of the best dividend stocks from the industry, we have run the Zacks Stock Screener to identify those with a dividend yield in excess of 2% and a sustainable dividend payout ratio of less than 60%.
Abbott Laboratories: Headquartered in Chicago, IL, Abbott Laboratories discovers, develops, manufactures and sells a diversified line of healthcare products. The company pays out a quarterly dividend of 51 cents ($2.04 annualized) per share, which gives it a 2.12% yield at the current stock price. This company’s payout ratio is 48%, with a five-year dividend growth rate of 14.01%. (Check Abbott’s dividend history here.)
We are impressed with Abbott’s consistent efforts to reward its shareholders through dividends and share repurchases. In February 2023, it announced an 8.5% hike in its quarterly dividend, taking the total to 51 cents per share (annualized $2.04). The company is also active on the buyback front. During the first half of 2023, ABT repurchased approximately 7 million shares for a total cost of $725 million. It currently has $1.71 billion available for repurchase under the share repurchase program, authorized by the board of directors in December 2021.
Koninklijke Philips: Headquartered in the Netherlands, Koninklijke Philips engages in diagnosis, treatment, monitoring & analytics, population health management, oral healthcare, mother & child care and personal care.
The company pays annualized dividends of 93 cents per share, giving it a 4.51% yield at the current stock price. Its payout ratio is 76%, with a five-year dividend growth rate of 0.39%. (Check Koninklijke Philips’ dividend history here.)
We are impressed with Koninklijke Philips’ efforts to reward its shareholders through dividends and buybacks. Its board of directors increased the annual cash dividend from 78 cents per share to 93 cents in 2023, indicating a dividend hike of 19.2%. The company is also active on the buyback front. During the fourth quarter of 2022, PHG repurchased 2.2 million shares under its share buyback program for an amount of up to 1.5 billion euros, announced in 2021. The company had contracts in place to buyback 17.4 million shares by 2022-end at a contracted value of 648 million euros.
Smith & Nephew: Headquartered in Engalnd, Smith & Nephew is a global medical device company that markets clinically superior products, principally in orthopaedics, endoscopy and wound management. SNN pays out a quarterly dividend of 28 cents ($0.90 annualized) per share, which gives it a 3.61% yield at the current stock price. This company’s five-year dividend growth rate is 3.5%. (Check Smith & Nephew’s dividend history here.)
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Abbott Laboratories (ABT) : Free Stock Analysis Report
Koninklijke Philips N.V. (PHG) : Free Stock Analysis Report
Smith & Nephew SNATS, Inc. (SNN) : Free Stock Analysis Report
