The CEO of Abbott Laboratories, Miles White, comments on the interplay between corporate strategy and long-term investor relationships in an August 6 interview with Investors Business Daily.
Asked about ABT’s record of increasing dividends each year for 38 years, cultivating a diversified medical product line that lacks “pure pharma” sizzle, and following the slow-but-steady approach to growth, White says this about his shareholders:
The company’s had an investment identity of reliable growth with dividends, a combination of growth and income.
It used to be called a stock for widows and orphans. Those things became a hallmark that investors seek.
If you want to maintain investor allegiance to your management philosophy, you have to pay attention to the identity that attracts investors to your stock.
Our identity attracts long-term investors who want reliable growth and reliable income: The dividend is part of that.
My point isn’t that every company’s investment identity should be the same as Abbott’s. But gathering intelligence about who our shareholders are and what they value makes sense. Aligning strategy at the CEO and board level to serve these shareholders, whether their style is to bet on tortoises or hares, makes sense.
I like White’s statement that he is expanding Abbott’s presence in emerging markets to provide growth to continue to raise the dividend each year, because widows-and-orphans style investors value that. (Note that 68% of ABT shareholders are institutional widows and orphans – they need care and feeding, too.)
For investor relations people, the mission is to communicate core messages that align with the strategy – so IR attracts investors who like our investment identity.