Healthcare stocks typically outperform the broader market during periods of market weakness due to their relative earnings and revenue stability. This stability enables them to pay dividends regardless of economic climate. Still, not all healthcare stocks are identical, so let’s look at three that provide appealing dividends and long-term growth potential.
First, we consider Pfizer (NYSE:PFE). This global pharmaceutical company has a long and rich history dating back to 1849. Projected to generate around $100 billion in 2022 revenue, Pfizer has a current market capitalization of $287 billion. At present, the stock provides a yield of 3.2%, and this year’s payout ratio is a mere 25% of earnings. This ensures the dividend’s safety and leaves substantial room for future increases. With an expected annual earnings per share growth of 5%, Pfizer is an attractive option for both income and price appreciation.
We then turn to Medtronic (NYSE:MDT). This firm develops, manufactures, and distributes medical devices to hospitals, doctors, clinics, and patients globally. Boasting a market cap of $103 billion, Medtronic has a commendable dividend increase streak spanning 45 years. Shares yield 3.5% today, with payout ratio just over half of earnings for the year. With expected 6% growth driven mostly by revenue improvements and margin expansion, Medtronic seems promising.
Our final selection is UnitedHealth (NYSE:UNH), a diversified healthcare company operating primarily in the U.S. Since its inception in the late 1970s, UnitedHealth generates approximately $325 billion in annual revenue and has a market cap of $500 billion. Notably, the company has an increasing dividend streak of 13 years and a modest yield of 1.2%. With this year’s payout ratio projected at 30% and an estimated 12% EPS growth in the upcoming years, we expect about 9% total returns for UnitedHealth.
In summary, Pfizer, Medtronic, and UnitedHealth are three healthcare stocks offering attractive dividends and potential for long-term growth. They are solid choices for investors seeking to diversify their portfolios, regardless of potential recession scenarios in 2023.
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