Healthcare company Abbott Labs ( ABT ) has a lengthy 44-year streak of dividend increases that it will likely extend this week. The stock has trended steadily higher through the year, and shares are currently up 39.3% on the year.
ABT was recently trading at $54.40, down $2.29 from its 12-month high and $16.50 above its 12-month low. Technical indicators for ABT are bullish and the stock is in a strong upward trend. The stock has recent support above $53.50 and recent resistance below $56.70. Of the 21 analysts who cover the stock, 12 rate it a "strong buy", two rate it a "buy", and seven rate it a "hold". DG gets a score of 75 from InvestorsObserver's Stock Score Report.
Abbott is a true dividend aristocrat, with a nice 44-year streak of increases. The stock has a low 42.6% payout ratio, so the company can easily afford to extend its streak of annual increases. ABT currently has a yield of 1.95%, and pays a $0.265 quarterly distribution. Look for the payment to rise to around $0.28, which would translate to a 5.6% increase. Look for the announcement this week, with the stock trading ex-dividend mid-January.
Stock Only Trade
If you're looking to establish a long stock position in ABT, consider buying the stock under $54.50. Sell if it falls below $49.00 or take profits if it gets to $62.50.
If you want to set up a bullish hedged trade on ABT, consider a February 44/49 bull-put credit spread for a 25-cent credit. That's a potential 5.3% return (27.4% annualized*) and the stock would have to fall 9.5% to cause a problem.
If you want to take a bearish stance on ABT at this time, consider a February 60/65 bear-call credit spread for a 25-cent credit. That's a potential 5.3% return (27.4% annualized*) and the stock would have to rise 10.8% to cause a problem.
Covered Call Trade
If you like the stock, but wish to lower your cost basis on a new position, you may want to consider a February $55.00 covered call. Buy ABT shares (typically 100 shares, scale as appropriate), while selling the February $55.00 call for a debit of $52.90 per share. The trade has a target assigned return of 4.0%, and a target annualized return of 21.0% (for comparison purposes only).