Updated on December 13th, 2023 by Bob Ciura
The healthcare sector is a great place to find high-quality dividend growth stocks. Look no further than the list of Dividend Aristocrats for evidence of this.
The Dividend Aristocrats are a select group of 64 stocks in the S&P 500 Index with at least 25 consecutive years of dividend increases. There are currently 8 Dividend Aristocrats that come from the healthcare sector.
The healthcare sector has a long-term growth catalyst going forward, which is aging populations around the world. Healthcare spending in many developed countries is likely to grow over the long term as a result.
With this in mind, we’ve compiled a list of over 200 healthcare stocks (along with important investing metrics like price-to-earnings ratios and dividend yields) which you can download below:
It is easy to see why healthcare stocks make for excellent long-term investments. The U.S. healthcare sector widely enjoys high profitability with solid cash flows. After all, people often cannot go without health care, even in challenging economic climates.
The rankings in this article are derived primarily from our expected total return estimates for every healthcare dividend stock found in the Sure Analysis Research Database.
For investors interested in high-quality dividend growth stocks, this article will discuss the top 7 dividend-paying healthcare stocks to buy now.
Table Of Contents
The seven best healthcare stocks are listed below in order of total expected returns over the next five years, from lowest to highest. You can instantly jump to any individual stock analysis by clicking on the links below:
- Health Care Stock #7: CVS Health (CVS)
- Health Care Stock #6: Premier, Inc. (PINC)
- Health Care Stock #5: Sanofi SA (SNY)
- Health Care Stock #4: GlaxoSmithKline ADR (GSK)
- Health Care Stock #3: Bristol-Myers Squibb (BMY)
- Health Care Stock #2: Baxter International (BAX)
- Health Care Stock #1: Organon (OGN)
Health Care Stock #7: CVS Health (CVS)
- 5-year expected annual returns: 14.1%
CVS Health Corporation is an integrated healthcare services provider that operates a pharmaceutical services business, along with the country’s largest chain of pharmacies. The company operates more than 9,900 retail locations, 1,100 medical clinics, and services more than 102 million plan members. CVS Health Corporation generates annual revenues of about $323 billion.
On November 1st, CVS Health Corporation reported third quarter results for the period ending September 30th, 2023. For the quarter, revenue increased 10.6% to $89.8 billion, topping estimates by $1.63 billion. Adjusted earnings-per-share of $2.21 compared to $2.09 in the prior year, and was $0.08 ahead of expectations.
Click here to download our most recent Sure Analysis report on CVS (preview of page 1 of 3 shown below):
Health Care Stock #6: Premier, Inc. (PINC)
- 5-year expected annual returns: 14.5%
Premier, Inc. is a healthcare improvement company that provides integrated analytics and data services to the managed healthcare industry. The business operates through 2 segments: Supply Chain Services and Performance Services, which made up about 65% and 35% of fiscal year 2023 sales, respectively.
The Supply Chain Services segment provides its members (hospitals and other organizations) with access to a variety of goods and services, such as clinical engineering and document shredding, as well as capital equipment, pharmaceuticals, laboratory supplies, and many more.
The Performance Services segment provides members with Premier Connect to address current cost and quality imperatives, manage a value-based care reimbursement model, and support their regulatory reporting framework.
On November 7th, 2023, Premier reported first quarter 2024 results for the period ending September 30th, 2023. The company earned $0.37 in non-GAAP earnings-per-share for the quarter, which represents a 3% year-over-year increase from $0.61 of earnings-per-share from a year-ago.
Click here to download our most recent Sure Analysis report on Premier (preview of page 1 of 3 shown below):
Health Care Stock #5: Sanofi SA (SNY)
- 5-year expected annual returns: 15.7%
Sanofi is a global pharmaceutical company. The company develops and markets a variety of therapeutic treatments and vaccines.
On October 27th, 2023, Sanofi reported third quarter results for the period ending September 30th, 2023. For the quarter, revenue grew 1.6% to $12.6 billion, but this was $10 million below estimates. The company’s earnings-per-share per ADR of $0.1.35 compared to $1.44 in the prior year and was $0.02 less than expected.
Click here to download our most recent Sure Analysis report on SNY (preview of page 1 of 3 shown below):
Health Care Stock #4: GlaxoSmithKline ADR (GSK)
- 5-year expected annual returns: 15.9%
GlaxoSmithKline develops, manufactures, and markets healthcare products in the areas of pharmaceuticals, vaccines, and consumer products. GlaxoSmithKline’s pharmaceutical offerings address the following disease categories: central nervous system, cardiovascular, respiratory, and immune inflation. The company generates about $35 billion in annual sales.
On November 1st, 2023, reported third quarter results for the period ending September 30th, 2023. For the quarter, revenue grew 10.9% to $9.9 billion while adjusted earnings-per-share of $1.22 compared to $1.07 in the prior year. Excluding Covid-19 sales, revenue grew 16%. Specialty medicines fell 1% for the quarter, but this was a much lower decline than the preceding quarters.
Click here to download our most recent Sure Analysis report on GlaxoSmithKline (preview of page 1 of 3 shown below):
Health Care Stock #3: Bristol-Myers Squibb (BMY)
- 5-year expected annual returns: 16.8%
Bristol-Myers Squibb is a leading drug maker of cardiovascular and anti-cancer therapeutics with annual revenues of about $47 billion.
For the 2023 third quarter, revenue declined 2.2% to $10.97 billion, which was in-line estimates. Adjusted earnings-per-share of $2.00 compared to $1.99 in the prior year and was $0.23 more than expected.
Adjusting for unfavorable currency exchange, revenue was down 3% for the quarter. U.S. revenues declined 4% to $7.6 billion while International was higher by 2% to $3.3 billion. When adjusting for currency exchange, International markets grew 1%.
Much of the decline was due to the result of generic competition for Revlimid, which was down 41% to $1.23 billion. Eliquis, which prevents blood clots, grew 2% to $1.8 billion.
Click here to download our most recent Sure Analysis report on BMY (preview of page 1 of 3 shown below):
Health Care Stock #2: Baxter International (BAX)
- 5-year expected annual returns: 19.6%
Baxter International develops and sells various healthcare products, including biological products, medical devices, and connected care devices used to monitor patients. Its products are used in hospitals, kidney dialysis centers, nursing homes, doctors’ offices, and for patients at home under physician supervision.
On November 2nd, 2023, Baxter International reported Q3 2023 results for the period ending September 30th, 2023. For the quarter, revenue increased 3% to $3.71 billion, but this was $11 million more than expected. Adjusted earnings per-share of $0.68 compared unfavorably to $0.82 in the prior year, but this was in-line with estimates.
Click here to download our most recent Sure Analysis report on Baxter (preview of page 1 of 3 shown below):
Health Care Stock #1: Organon (OGN)
- 5-year expected annual returns: 20.7%
Organon is a healthcare company that develops and delivers health solutions through a portfolio of prescription therapies globally. The company focuses on women’s health through a long list of products that treat various indications.
Source: Investor presentation
Organon was spun out of pharmaceutical giant Merck (MRK) in the summer of 2021.
On November 2nd, 2023, Organon reported third quarter results for the period ending September 30th, 2023. For the quarter, revenue of $1.52 billion was 1.3% lower from the prior year and $50 million less than expected. Adjusted earnings-per-share of $0.87 compared unfavorably to $1.32 in the prior year and was $0.19 below estimates.
Click here to download our most recent Sure Analysis report on Organon (preview of page 1 of 3 shown below):
Final Thoughts
There are plenty of quality dividend stocks to be found in the healthcare sector. Many large healthcare companies are highly profitable, with long-term growth up ahead due to aging populations.
Shareholders of many healthcare stocks are likely to receive dividend increases each year. These seven healthcare stocks pay dividends to shareholders and are almost all reasonably valued, leading to high expected returns over the next five years.
Other Reading
The Dividend Aristocrats list is not the only way to quickly screen for stocks that regularly pay rising dividends.
- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of rising dividends.
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 54 stocks with 50+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500.