Why Johnson & Johnson Outpaces Abbott as a Dividend King

Johnson & Johnson has beaten the broader market this year while Abbott Laboratories has lagged. The two healthcare giants both belong to the Dividend Kings group, a club of companies that have raised payouts for at least 50 consecutive years. Their diverging stock performance reflects different risk profiles and catalysts.

Abbott Laboratories has faced headwinds in its diagnostics and nutrition segments. Revenue and earnings growth has been soft in those areas. The company also dealt with lawsuits claiming its baby formula caused health issues in premature babies. That litigation has weighed on the stock. AlphaScala's proprietary model rates Abbott at an Alpha Score of 30, labeled "Weak," signaling the pressure.

Abbott still has growth drivers. Its FreeStyle Libre continuous glucose monitoring system remains a strong performer. The company acquired Exact Sciences earlier this year in a $21 billion cash deal, bringing the Cologuard colorectal cancer test under its umbrella. That acquisition should boost the diagnostic division. Abbott has raised its dividend for 54 consecutive years, keeping its Dividend King status intact.

Johnson & Johnson also faces challenges. The company lost U.S. patent exclusivity for Stelara, an immunosuppressant, in 2025. Government-led drug price negotiations have targeted several of its medicines. Despite those headwinds, Johnson & Johnson's revenue is on track to exceed $100 billion this year, a milestone few biopharmaceutical companies have reached. The company earned approval for Icotyde, the first oral drug targeting the IL-23 receptor for plaque psoriasis. It also received clearance for the Ottava robotic-assisted surgery system. The talc litigation overhang has moved closer to resolution. Johnson & Johnson has increased its dividend for 64 straight years. AlphaScala's model gives it an Alpha Score of 47, labeled "Mixed."

Comparing the two, Johnson & Johnson generates higher revenue and earnings. Abbott's recent revenue growth partly reflects the Exact Sciences acquisition. Johnson & Johnson's dividend track record is longer: 64 years versus Abbott's 54. Johnson & Johnson trades at 23 times forward earnings, above Abbott's 20.7 times and the healthcare sector average of 19.2 times. The Motley Fool's Prosper Junior Bakiny wrote that the premium is justified given Johnson & Johnson's stronger underlying business and better prospects. Bakiny called Johnson & Johnson the better pick between the two Dividend Kings.

Both stocks remain solid choices for income-focused investors. Johnson & Johnson's 64-year dividend increase streak gives it a longer track record of reliability. Abbott's 54-year streak is still a rare achievement. The divergence in their stock performance this year reflects the market's view of their respective risks and opportunities.