The health care sector is a haven for income investors. That's because large health care companies tend to have favorable qualities. They are highly profitable, they sell products that people cannot go without and they exercise pricing power over their customers.

These qualities allow many health care companies to pay reliable dividends to shareholders and steadily increase those dividends over time. They generate enough cash to satisfy their research and development needs while still having plenty left over to reward shareholders with dividend payments.

Abbott Laboratories(ABT) - Get Report possesses all of the qualities that an income investor would want. It has a balanced business model across focused areas, and offers industry-leading products in its various categories.

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Abbott is on the list of Dividend Aristocrats. These are stocks that have increased their dividends each year for for at least 25 years. In Abbott Laboratories' case, the streak is an impressive 43 years. You can see all 50 Dividend Aristocrats here.

Abbott Laboratories' stock has an attractive valuation and an above-average dividend yield. The company has a forward price-to-earnings ratio of 18 and a dividend yield of 2.4%. It should continue to grow earnings and dividends for many years thanks to the aging global population, which gives it better-than-average growth prospects.

The combination of a long dividend history, an above-average dividend yield, reasonable valuation and solid growth prospects make Abbott Labs a favorite of The 8 Rules of Dividend Investing.

Stability, Growth and Income

Abbott has a diversified business model both in terms of product focus and geography. The company is split up into four categories, which are nutrition, diagnostics, medical devices and pharmaceuticals. Each business segment is about the same size. Abbott has more than half of global adult nutrition sales, thanks to its flagship Ensure product.

The company is perfectly positioned to capitalize on the aging U.S. population. The baby boomer generation is the second-largest in America, just behind the millennials. Tens of millions of people in the U.S. are in or nearing retirement, and Abbott stands to benefit from its market-leading position in adult nutrition, medical devices and pharmaceuticals.

In addition, the company is nearly evenly split among geographic markets. Abbott generates approximately 50% of its sales from developed economies including the U.S., and the other 50% from emerging markets. China and India make up more than one-quarter of Abbott's annual revenue.

Abbott's strategy is to maximize profitability in the U.S. by achieving cost cuts, and to increase sales in the emerging markets by driving market share gains and leveraging its pricing power.

The company forecasts pharmaceutical sales will increase at a 9% rate each year in underdeveloped economies through the end of the decade, which would be higher than average economic growth in these regions.

This strategy worked well for the company last year. In 2015, Abbott's revenue excluding the impact of foreign exchange fluctuations, increased 9.1% over 2014. Growth was boosted by the emerging markets, where sales increased 17% year over year.

Abbott is off to a good start to 2016 as well. Company-wide adjusted revenue rose 5.8% over the first half of 2016, compared with the same period last year. Abbott enjoyed broad-based success, with adjusted revenue growing across all of its four core businesses over the first six months.

The best-performing group for Abbott this year is pharmaceuticals, which posted 10% adjusted revenue growth in the first six months of the year.

Going forward, Abbott's long-term growth will be achieved by continued expansion in the international markets, and also by acquisition. Abbott has acquired St. Jude Medical for $25 billion. This is a huge acquisition that could cement Abbott's leading position in medical devices.

St. Jude is an attractive acquisition because it provides Abbott with product categories likely to benefit the most from the aging U.S. population, specifically in cardiovascular, diabetes and vision. Abbott forecasts significant cost synergies in the amount of $500 million per year, which is why management expects the acquisition to be accretive to profits as soon as next year.

Abbott is an attractive stock pick for dividend investors. It is a Dividend Aristocrat and has increased its dividend for 43 consecutive years. Abbott's last increased its dividend by 8%, so the company has a track record of high dividend growth. Going back even further, Abbott has paid 370 quarterly dividends without interruption, start back in 1924!

The stock has a current dividend yield of 2.4%, which is attractive as the average yield in the S&P 500 index is only 2%. Furthermore, Abbott stock has a modest valuation with a forward price-to-earnings ratio of 18.

Abbott stock may not be a screaming bargain, but as the old investing adage goes, premium companies command premium valuations. Abbott is a very high-quality company and should reward shareholders with growth and dividends for many years.

This article is commentary by an independent contributor. At the time of publication, the author held shares of ABT.