Which Dividend Aristocrat Will Keep Paying Out for Generations to Come?
Of all the business sectors, healthcare is one that rarely go out of demand. Why? Because every stage of life, from birth to death, requires healthcare. That demand does not disappear even during recessions and uncertainty. That is exactly why many investors keep track of the big names in the industry, such as Johnson and…
Of all the business sectors, healthcare is one that rarely go out of demand.
Why? Because every stage of life, from birth to death, requires healthcare. That demand does not disappear even during recessions and uncertainty. That is exactly why many investors keep track of the big names in the industry, such as Johnson and Johnson and Abbott Laboratories
One common trait about these two companies is that they have both been operating for decades, weathering market headwinds all while consistently increasing their payments to their investors. But like with any investment, not everything is equal. So, which stock should you add to your portfolio?
Let’s start with Johnson & Johnson, the larger company of the two. The company operates in two segments: prescription drugs and medical devices and as a global presence across the healthcare industry and has a market cap of around $589 billion.
As of writing, Johnson & Johnson trades at around $244, up almost 18% year-to-date.
Abbott Labs is a diversified healthcare company that develops medical devices that help bring healthcare beyond hospitals and into the home.
Abbott currently has a market cap of around $179 billion. Its stock trades at roughly $102 per share, but unlike JNJ, it’s down about 18% since the start of 2026.
So, with Johnson & Johnson being bigger name and having had the better year so far, which company is the better buy?
Not quite.
These two healthcare giants are often grouped together, but their businesses are not identical.
Johnson & Johnson is more focused, with its core strengths in prescription drugs and healthcare technology.
Abbott, on the other hand, is more diversified. It operates across four business segments, with nutrition standing out as one of its most important areas.
To get a better sense of which stock may be the stronger investment, let’s compare their latest quarterly results.
Metric
Johnson & Johnson
Abbott Laboratories
Sales
$24.56 billion
$11.46 billion
Net Income
$5.12 billion
$1.78 billion
P/E Ratio (Forward)
21.01
18.00
Price/Sales
6.20
4.00
JNJ generated $24.56 billion in sales, more than double Abbott’s $11.46 billion. That gap also shows up in profitability, with Johnson & Johnson posting $5.12 billion in net income, nearly three times Abbott’s $1.78 billion.
Meanwhile, valuation tells a slightly different story.
Abbott trades at a lower forward price-to-earnings ratio of 18, compared with 21 for Johnson & Johnson. Since the P/E ratio shows how much investors are paying for each dollar of earnings, a lower P/E may indicate a cheaper stock- especially when comparing companies within the same peer group.
Thats said, both companies trade below the broader healthcare sector average of 22.21, which suggests neither looks especially expensive on that measure.
The same pattern appears in the price-to-sales ratio, which shows how much investors are paying for each dollar of the company’s revenue. Johnson & Johnson comes in at 6.20, while Abbott is lower at 4.00.
Johnson & Johnson looks stronger in scale and profitability, while Abbott appears cheaper based on valuation.
Now, the exciting part: dividends.
Johnson & Johnson pays a forward annual dividend of $5.20, translating to ~2.13% yield. It has a dividend payout ratio of 47.22%, meaning that roughly 47% of its earnings are dedicated to paying shareholders, leaving a large margin for reinvestment. Further, it has increased its dividends for 63 consecutive years.
Meanwhile, Abbott Laboratories pays $2.52 per share per year, translating to a yield of around 2.46%, slightly higher than Johnson & Johnson. Its dividend payout ratio is 45.41%. Abbott has a 54-year streak of dividend increases.
Based on the dividend data, both companies are operating at nearly the same level.
Since it’s a close call, let’s see what experts say:
A consensus among 26 analysts rates Johnson & Johnson stock a “Moderate Buy” and its $280 high target price suggests a potential 15% upside.
Meanwhile, analysts are bullish on Abbott Laboratories. A consensus among 28 analysts rates the stock a “Strong Buy,” and its $158 high target price suggests as much as 54% potential upside.
Despite their size differences, both JNJ & Abbott have a significant foothold in the medical sector. On top of that, they’ve been paying increasing dividends for over 50 years straight. That kind of consistency is a huge green flag for any investment.
And though the battle for the top spot between these two has been neck-and-neck, the picture changes once you see what Wall Street thinks. Right now, Abbott looks like the more attractive pick. It’s cheaper, pays more, and has more upside. Even the lower end of Abbott’s targets indicicates growth.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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