Dividend stocks are highly appealing to passive income investors. These stocks not only provide a consistent income stream, but also have the potential for long-term capital appreciation and can be considered a low-risk investment option. 

The regular payouts are especially attractive to investors seeking passive income, such as retirees or anyone who is keen to earn some extra money. More importantly, consistent dividend-paying companies indicate a steady business. Here are two such dividend stocks that income-oriented investors might want to consider.

Dividend Stock #1: Abbott Labs

Abbott Laboratories (ABT), established in 1888, is a leading global healthcare company with a diverse portfolio that includes diagnostics, medical devices, nutrition, and pharmaceuticals. 

Abbott has consistently adapted to the changing healthcare industry, making it a popular choice for investors looking for steady growth and predictable dividends. The company's diverse business segments provide resilience against sector-specific risks, resulting in consistent revenue streams and the ability to pay and increase dividends.

Abbott's stock is up 3.76% year-to-date compared to the S&P 500 Index’s ($SPX) gain of 23.7%. 

Abbott recently increased its quarterly dividend by 7.3%, to $0.59 per share. Abbott Labs has earned the title of Dividend King - a list of companies that have raised dividends for 50 years in a row. This title also reflects the company's stability and commitment to paying back its shareholders.

Abbott has a forward dividend yield of 2.1%, which is higher than the sector average of 1.58%. Furthermore, its not-so-high forward payout ratio of 45.7% indicates that the company will be able to sustain its dividend payments, leaving ample room for future increases. 

Abbott has demonstrated strong financial performance over the years. In the third quarter of 2024, the company reported $10.63 billion in revenue, up 4.9% year-over-year. The medical devices segment was a standout performer, thanks to high demand for FreeStyle Libre, Navitor, TriClip, and other cutting-edge electrophysiology products.

Earnings per share (EPS) for the quarter came in at $1.21, exceeding analyst expectations and higher than $1.14 a year ago. This growth was driven by operational efficiencies and a focus on high-margin products.

Sales in key emerging markets increased by 5.4% organically. This includes Abbott's branded generics product portfolio, which offers lower-cost alternatives to brand-name drugs in gastroenterology, cardiometabolic, and central nervous system/pain management. Management believes that key emerging markets offer long-term growth opportunities for these products. Abbott is also investing in next-generation devices to stay ahead of the competition.

For the full year, management expects earnings to increase by 4.5% to 5.8%, respectively, compared to EPS of $4.44 in 2023. Analysts expect Abbott Labs’ earnings to increase by 5.3% in 2024, followed by another 10.3% in 2025.

What Does Wall Street Say About ABT Stock?

Analysts have given the stock an average target price of $132.59, indicating an 18% increase from current levels. The high price estimate of $149 implies upside of 32.5% over the next 12 months. 

Overall, analysts have rated ABT stock a “Strong Buy.” Out of 24 analysts covering the stock, 16 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and six have a “Hold” rating.

Dividend Stock #2: Pfizer

Founded in 1849, and with a market cap of $146.7 billion, Pfizer (PFE) has evolved into a global pharmaceutical giant selling its products in over 200 countries. 

While the company is best known for its groundbreaking COVID-19 vaccine, its diverse product portfolio covers a wide range of therapeutic areas such as oncology, immunology, cardiology, and vaccines, allowing it to maintain a stable business. 

Pfizer stock has dipped 8.6% year-to-date, compared to the broader market gain.

Pfizer is a popular choice among income investors due to its consistent dividend payments. While Pfizer is not a Dividend King like Abbott Labs, the company has consistently increased its dividends over the past 15 years. Furthermore, it pays a dividend yield of 6.6%, which is higher than the healthcare sector average of 1.6%.

It paid out $7.1 billion in cash dividends in the quarter. Pfizer's payout ratio of 59.6% is sustainable, allowing for dividend growth if the company's earnings continue to rise.

Pfizer's largest business segment is biopharmaceuticals, which includes innovative medicines in oncology and rare diseases. In the third quarter, Pfizer reported $17.7 billion in revenue, a decrease from the pandemic peak. However, it increased 32% year-over-year, reflecting continued strong performance across its core product lines. Adjusted EPS came in at $1.06, up from a $0.17 loss in Q3 2023 and exceeding analysts' expectations.

Management stated that the performance was driven by contributions from acquired products, key in-line products, and Paxlovid's growth contributions. Paxlovid is a prescription antiviral that treats mild and moderate COVID-19 cases in adults. Paxlovid sales increased following the recent global COVID-19 wave. Furthermore, the company's non-COVID-19 products experienced 14% operational revenue growth in Q3. 

Management anticipates a 4.2% to 9.4% increase in revenue for the full year, as well as earnings growth of 49% to 60%. Analysts expect Pfizer's earnings to increase by 59% to $2.93 per share in 2024, but remain flat in 2025. 

While Pfizer is a stable and mature company, it is still putting in efforts to keep up with the AI-enabled healthcare landscape. The company has 108 projects in the works that could help it expand its business in the coming years.

What Does Wall Street Say About Pfizer Stock?

On Wall Street, overall Pfizer stock is a “Moderate Buy.” Out of the 24 analysts who cover PFE stock, 11 rate it a "Strong Buy," 12 rate it a “Hold,” and one says it’s a “Strong Sell.” Its average price target of $31.57 suggests the stock can increase by 20% over current levels. Its high target price of $45 implies upside potential of 70% over the next 12 months. 

On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.