There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

October 17, 2011 - Abbott Laboratories (ABT-NYSE) engages in the discovery, development, manufacture, and sale of health care products worldwide. The company offers adult and pediatric pharmaceuticals for rheumatoid and psoriatic arthritis, ankylosing spondylitis, psoriasis, and Crohn's disease; dyslipidemia; HIV infection; prostate cancer, endometriosis and central precocious puberty, and anemia caused by uterine fibroids; respiratory syncytial virus; adult males who have low or no testosterone; secondary hyperparathyroidism; hypothyroidism; and pancreatic exocrine insufficiency, as well as anesthesia products.

In addition, the company offers a line of pediatric and adult nutritional products. Further, it provides coronary, endovascular, vessel closure, and structural heart devices, such as drug-eluting stent systems, coronary metallic stents, balloon dilatation products, coronary guidewires, vessel closure devices, carotid stent systems, percutaneous valve repair systems, and drug eluting bioresorbable vascular products.

Abbott also provides blood glucose monitoring meters, test strips, data management software, and accessories for people with diabetes; and medical devices for the eye, including cataract surgery, lasik surgery, contact lens, and dry eye products, as well as branded generic pharmaceutical products. Abbott primarily serves retailers, wholesalers, hospitals, and health care facilities. Abbott was founded in 1888 and is headquartered in Abbott Park, Illinois.

Conservative investors like cash. Abbott has plenty of it, over $8.8 billion or $5.71 per share. They also like dividends. ABT uses part of its cash to pay those at the current rate of $1.92 a year for a yield of 3.6%. Last year's rate was $1.72. The year before that: $1.56. You get the trend here. In fact the dividend has gone up every year for the last 39 years and the second quarter raise to 48 cents was the 349th consecutive quarterly dividend to be paid. That's close to 30 years of continuous dividend payments. Given the trend in earnings, the dividend's upward tradition doesn't look in danger.

Earnings should be $4.64 this year, according to the consensus estimate from 23 analysts. The range among them is $4.56 to $4.71. Last year, they were $4.17. For 2012, look for $5.00 (the range is $4.65 to $5.32). Quarterly results for the third period should be $1.17 compared to $1.05 last year in the third. For the final quarter, expect $1.44 vs. $1.30 last year in the last period. Over the previous 5 years, earnings increased, on average, 13.43% a year. For the next 5, analysts predict 9.11%.

Investors have been concerned about competition from generics for Humira, but anlaysts feel it's over blown. They predict ABT will have the market for the oral administered drug for several years and should be a strong contributor to earnings at least until 2016. And the drug hasn't been introduced yet in many emerging markets. The company is working on that, expanding its marketing effort particularly in India.

Emerging market sales were up 23% to $2.6 billion in the first period. That's 27% of total revenues for ABT. These markets represent one of the best opportunities for growth and already account for 58% of Established Pharmaceuticals sales and 42% of Nutritional's revenues, which will most likely exceed $2 billion this year. Analysts see this number doubling in the next 5 years.

Conservative investors like a couple of other things in their stocks: low price volatility and low valuations. ABT comes through on both of these as well. The price hasn't seen the wild fluctuations the market has punished most others with. In fact, the range for ABT has been very narrow for the last 4 years, going from a low of $41.30 to a high of $56.80. As for valuation, the forward P/E currently is 10.5. It also carries an A++ for Financial Strength.

Essential Numbers:
- Trailing P/E: 16
- Price to sales ratio: 2.2
- Price to book: 3.11
- Operating margin: 19.88%
- Profit margin: 13.78%
- Return on equity: 22.12%
- Return on assets: 8.03%
- Revenues last 12 months: $37.3 billion
- Total debt: $18.22 billion
- Total debt to equity: 68.83%
- Current ratio: 1.52
- Book value per share: $16.95
- Change in last 52 weeks: - .83%
- Total shares Outstanding: 1.56 billion
- Float: 1.5 billion
- Insiders own: .17%; institutions own: 66.4%
- Dividend: $1.92
- Payout ratio: 55%
- Yield: 3.6%
- Dividend date: 11/14
- Ex-dividend date: 10/12

Conservative investors will find a lot to like in ABT, starting with all the cash. Plus the low volatility (.31 beta). Plus the growth this large company can still generate. But be aware of the generic threat. Because Humira is such a blockbuster drug, if it is duplicated by a generic, that will send these shares lower. However, it seems to be well protected for at least the next 3 to 5 years.

- Company Web site: www.abbott.com

Ted Allrich