In an effort to increase shareholder value, Abbott Laboratories’ (ABT) board of directors has approved a new share repurchase program.
The board has authorized the repurchase of shares worth up to $3 billion. The new program adds to the $511 million of authorization unused from the prior program, announced in Jun 2013.
The new authorization will leverage Abbott Labs’ solid financial position. The company had cash and cash equivalents of $3.6 billion at the end of second-quarter 2014.
Concurrently, Abbott Labs also declared a quarterly common dividend of 22 cents per share which will be paid on Nov 15, 2014 to shareholders of record at the close of business on Oct. 15, 2014.
We note that Abbott Labs had announced a 57% increase in dividends from 14 cents to 22 cents per share in Feb 2014.
We remind investors that Abbott Labs has returned approximately $35 billion to its shareholders through dividends and share repurchases in the last 10 years. The recent increase in dividends and share repurchase program further reinforces the company’s commitment to return value to shareholders following the separation of its research-based pharmaceuticals business into a new company, AbbVie Inc. (ABBV), in Jan 2013.
Abbott Labs reported better-than-expected sales and earnings in the second quarter of 2014, thereby keeping alive its earnings surprise streak. The latest news will further boost investor interest.
Currently, Abbott Labs carries a Zacks Rank #2 (Buy). Other stocks in the health care sector that look attractive include Allergan (AGN) and Gilead Sciences (GILD). Both carry a Zacks Rank #1 (Strong Buy).
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