Johnson & Johnson Trumps Abbott Laboratories as Dividend King

Two Dividend Kings in the healthcare sector are Abbott Laboratories (ABT) and Johnson & Johnson (JNJ). Both companies have a long history of increasing their payouts to shareholders, with Abbott having raised its dividends for 54 consecutive years and Johnson & Johnson for 64 straight years. However, while both companies have a strong track record, they have performed differently this year. Abbott has been a market laggard, but Johnson & Johnson has beaten broader equities.

Abbott Laboratories faces several challenges, including revenue and earnings growth that hasn't been strong in its diagnostics and nutrition segments, as well as legal and regulatory headwinds. However, the company is looking to turn things around with its core medical device segment, particularly its diabetes care unit, which remains one of its main growth drivers. Additionally, Abbott acquired Exact Sciences earlier this year for $21 billion, bringing Cologuard, a leading non-invasive diagnostic test for colorectal cancer, under its umbrella.

Johnson & Johnson, on the other hand, has performed well and continues to grow its revenue and earnings at a good clip. The company's vast lineup of medicines is driving growth, and it recently earned approval for Icotyde, the first oral drug that targets the IL-23 receptor approved for plaque psoriasis.

Johnson & Johnson is currently trading at 23x forward earnings, compared to 20.7x for Abbott. However, given its stronger underlying business and better prospects, it deserves a premium. Analysts have identified Johnson & Johnson as a much better pick between the two companies right now.