Two of the biggest healthcare giants in the world didn't take very long to jump into the COVID-19 testing waters. Both Abbott Labs (NYSE:ABT) and Roche (OTC:RHHB.Y) quickly launched diagnostic tests for the novel coronavirus soon after the pandemic hit.

Roche's shares have outgained Abbott's so far this year, but not just because of the two companies' respective COVID-19 products. Which of these two healthcare stocks is the better coronavirus play going forward?

Gloved hands holding cotton swab and vial with coronavirus printed on the label

Image source: Getty Images.

The case for Abbott Labs

Abbott Labs' COVID-19 test for its ID NOW platform is the fastest on the market, giving a positive result in just five minutes. It's also arguably the most controversial test on the market. The Food and Drug Administration (FDA) warned that the ID NOW test could return false negative results after an NYU study identified potential sensitivity problems with Abbott's test.

The controversy appears to be fading, though. Abbott recently released interim clinical data that showed high levels of accuracy for its ID NOW test in returning positive and negative results for COVID-19. The company said these results match what it's been hearing from customers. Abbott also markets four other COVID-19 tests, two of which test for novel coronavirus antibodies.

Although the COVID-19 pandemic negatively impacted Abbott's overall diagnostics revenue in the first quarter, the company still beat Wall Street expectations. As hospitals and labs return to normal operations, Abbott could benefit from pent-up demand for diagnostic testing that's unrelated to COVID-19, as well as enjoy strong growth for its COVID-19 tests.

Meanwhile, the company's lineup includes several other products with fast-growing sales. Abbott's Freestyle Libre continuous glucose monitoring (CGM) system is a big winner that should grab an even larger market share once a new version is approved in the U.S. The company's Alinity diagnostics platforms and its MitraClip mitral regurgitation treatment option are also key contributors to Abbott's growth.

Another big plus for Abbott Labs for investors is its dividend. The company has increased its dividend payout for a remarkable 48 years in a row. Abbott's dividend currently yields 1.6%.

The case for Roche

Roche made headlines in mid-March with its launch of COVID-19 tests that returned results in less than four hours. At the time, that turnaround was blazingly fast compared to competitors. Roche also became the first commercial company to win FDA Emergency Use Authorization (EUA) for a COVID-19 test.

Later that month, Roche announced that it was evaluating its rheumatoid arthritis drug Actemra in a late-stage study for treating pneumonia in patients with COVID-19. Actemra blocks the interleukin-6 (IL-6) receptor, which helps reduce the immune system's inflammatory response in rheumatoid arthritis and could prevent COVID-19 patients' immune systems from attacking other cells in what's called a cytokine storm.

The healthcare giant didn't quit working on the diagnostics side of battling COVID-19. In early May, the FDA granted EUA to Roche's novel coronavirus antibody test. Like Abbott, though, Roche's diagnostics unit experienced some temporary headwinds as a result of the COVID-19 pandemic in the first quarter.

There's a much bigger story for Roche, however, than just diagnostics. The company's pharmaceuticals division generated more than 80% of total revenue in the first quarter. Roche has a strong lineup including cancer immunotherapy Tecentriq, hemophilia drug Hemlibra, multiple sclerosis drug Ocrevus, and breast cancer drug Perjeta. It also has a promising pipeline, with close to 20 regulatory filings anticipated this year.

Roche doesn't have the impressive track record of dividend hikes that Abbott Labs does. However, its dividend yield of nearly 2.6% is higher than Abbott's. Roche should also be in a solid position to boost its dividend payout over the next several years.

Better coronavirus stock

I think that both of these stocks should deliver solid total returns over the next few years. But my take is that Abbott Labs is the better pick between the two.

Roche faces challenges with declining sales of its older drugs, especially Avastin, Rituxan, and Herceptin. Abbott doesn't have the same level of baggage that Roche does. My view is that Abbott's multiple growth drivers, including its COVID-19 tests, in addition to its reliable dividend, make the stock a great pick for long-term investors.