Diamond Hill Capital’s Top 10 Stock Picks

2. Abbott Laboratories (NYSE:ABT)

Value of Diamond Hill Capital’s 13F Position (9/30/2024): $762 million

Number of Hedge Fund Shareholders (9/30/2024): 64

Abbott Laboratories (NYSE:ABT) has been one of Diamond Hill’s major holdings dating all the way back to 2014, and has featured as the fund’s top stock pick on multiple occasions. The fund raised its stake in Abbott by 9% during Q3, with the holding jumping from 4^th to 2^nd among its top stock picks as a result.

Abbott Laboratories (NYSE:ABT) has an extensive portfolio of medical devices and diagnostic tests that are relied upon for conditions both severe and relatively benign. The company has exhibited strong overall growth despite the continued decline in sales of its Covid-19 testing kits, with organic sales growing by 8.2% year-over-year in the third quarter when excluding that unit. Overall revenue rose by 4.9% during the quarter to $10.6 billion.

Despite its standing as a Dividend King, Abbott has not skimped in the slightest when it comes to further growing its dividend payments to shareholders. It recently raised its quarterly payout by another 7.3% to $0.59 per share, pushing its overall dividend growth to 60% since 2020. Barclay’s expects the company’s earnings to grow by about 11% annually between 2024 and 2026, excluding the small contribution from the Covid unit, so Abbott should have no difficulty covering the increased payouts to shareholders.

The Diamond Hill Select Strategy discussed why it likes Abbott Laboratories (NYSE:ABT) in the fund’s Q2 2024 investor letter:

“Abbott Laboratories (NYSE:ABT) is a diversified health care company with an extensive portfolio that spans medical devices, pharmaceuticals, nutritionals and diagnostics. With a substantial portion of its revenues generated internationally, emerging markets contribute about 40% of overall sales. We have always liked Abbott’s diverse mix of businesses and its fundamental growth prospects. The management team has consistently demonstrated skill in capital allocation, highlighted by strategic divestitures such as the European generic business in 2014, and significant acquisitions like St. Jude in 2016.”