2 great dividend stocks to buy for under $200

Investing in dividend stocks is one of the best and easiest ways to generate excellent long-term returns, especially if you choose those with a reliable track record of increasing payouts.

Companies that can regularly increase their payouts over the long term generally have solid businesses. In addition, reinvesting dividends can significantly increase your total return over time. Despite these benefits, some outstanding dividend stocks can still be had at reasonable prices. Two of the most impressive currently trading at less than $200 per share are Abbott Laboratories (ABT -0.27%) and Johnson & Johnson (JNJ 0.01%).

Abbott Laboratories: $114 per share

Abbott Laboratories is a healthcare giant with products that span a wide range of therapeutic areas, from nutrition and diagnostics to cardiovascular health and diabetes care. Some of the company’s brands are top names in their fields — its Similac baby formula, for example, and MitraClip, which helps treat mitral valve insufficiency (a heart-related condition).

In recent years, its FreeStyle Libre franchise of continuous glucose monitoring (CGM) systems — which help diabetics keep track of their blood glucose levels — has become a leader in its niche and the company’s main growth driver .

Abbott Laboratories recently expanded its CGM franchise with an over-the-counter option and another for people who want to monitor their blood sugar for other health reasons but don’t have diabetes. The point is, Abbott is an incredibly innovative company. It has been developing new devices for decades, has a broad footprint in the healthcare industry, is a brand that doctors and consumers tend to trust, and has generally delivered reliable financial results. This is no guarantee that Abbott will perform well in the future, but the fundamentals of its business have not changed.

Abbott’s top line has been somewhat inconsistent in recent years as revenue from its COVID-19 diagnostic products has waxed and waned. But despite the impact of these changes, the company has generally performed decently.

ABT Revenue Data (Quarterly) by YCharts.

What’s more, this volatility won’t affect Abbott forever. It’s also worth noting that the healthcare giant has plenty of growth opportunities, particularly in diabetes care. The CGM market is severely underpenetrated — Abbott estimates that only 1% of adults with diabetes worldwide have access to CGM technology.

When it comes to dividends, Abbott has increased its payout for 52 consecutive years, making it a dividend king.

Unless something catastrophic deals a huge blow to the company (and a pandemic wasn’t enough), the company should keep this streak going.

Johnson & Johnson: $163 per share

Johnson & Johnson’s legal and regulatory issues have somewhat overshadowed its business results in recent years. Legally, it still faces thousands of lawsuits from people who claim its talc-based products caused their cancer. On the regulatory side, the Inflation Reduction Act allowed, for the first time, Medicare to negotiate with drug companies the prices it will pay for some widely used drugs; this will result in Johnson & Johnson receiving less revenue for several of its products.

However, these obstacles aside, the company has made important changes in its business. It spun off its consumer health segment, which was a drag on revenue growth. It also strengthened its medical devices segment with the $16.6 billion acquisition of Abiomed, which focuses on developing products for heart and lung problems.

While not spectacular, Johnson & Johnson’s financial results remained solid. In the second quarter, its revenue rose 4.3% year over year to $22.4 billion, while adjusted earnings per share rose 10.2% to $2.82 . While headwinds could affect short-term results, the company should be able to find ways to navigate through them.

Johnson & Johnson has been developing new medicines for a long time and has dealt with many different legal and regulatory landscapes. Its current pipeline includes 101 programs. It routinely wins new drug approvals and label extensions for those it already has on the market, and had several such wins during the second quarter. It also made a trio of regulatory claims. Johnson & Johnson’s ability to continue developing new products is one of the most important reasons why its long-term outlook looks strong.

Meanwhile, its dividend record is impressive. Johnson & Johnson is another dividend king with a streak of 62 consecutive payout increases. The company should continue to reward shareholders with dividend increases for a long time to come.