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Diversified pharmaceutical firm
Abbott Labs(ABT - Get Report), another of 2012's
"Dividend Opportunity" stocks, is another name that hiked its payouts last week, ratcheting its dividend by 6.25% to 51 cents per share. That's a 3.62% yield at current levels.
While Abbott generates the majority of its sales though pharmaceuticals, the firm's exposure to medical devices and nutritional products makes the firm much more diversified than most of its peers. In a time where patent drop-offs are scaring investors away from big pharma more than ever before, Abbott's exposure to side businesses should look especially attractive.
That won't be the case for long, though -- Abbott is planning on splitting its pharmaceutical arm off from its health-care business. The move should squeeze some added returns out of the business at the risk of much more concentrated sector risk.
That said, the risks are a moot point for shareholders who own Abbott now; they will get shares of both companies.
On the other hand, current shareholders will also get to benefit from the value that's unlocked from the deal. In a market where valuations are under pressure, a sum-of-the-parts valuation is often less attractive than breaking businesses up. The move will boost margins at the pharmaceutical arm and make it more directly comparable with big pharma peers.
Ample balance sheet liquidity should keep dividends rolling for ABT shareholders.
In the fourth quarter,
Fortress Investment Group initiated a new position in Abbott, which is also one of
Ken Fisher's top holdings.