The Top 7 Dividend Healthcare Stocks Now

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 7 Dividend Aristocrats that come from the health care sector.

You can download an Excel spreadsheet of all 65 Dividend Aristocrats (with metrics that matter like dividend yields and price-to-earnings ratios) by clicking the link below:

It is easy to see why health care stocks make for excellent long-term investments. The U.S. health care sector widely enjoys high profitability with strong cash flows. After all, people often cannot go without health care, even in difficult economic climates.

And, with an aging population, the U.S. healthcare industry is expected to see robust demand for a variety of healthcare products and services going forward.

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. We further narrowed down the list by selecting only U.S.-based companies, with a Dividend Risk score of C or better.

For investors interested in high-quality dividend growth stocks, this article will discuss the top 7 dividend-paying health care stocks to buy now.

Table Of Contents

The 7 best health care stocks are listed below in order of total expected returns over the next 5 years, from lowest to highest. You can instantly jump to any individual stock analysis by clicking on the links below:

Health Care Stock #7: Merck & Company (MRK)

• 5-year expected annual returns: 11.0%

Merck & Company is one of the largest healthcare companies in the world. Merck manufactures prescription medicines, vaccines, biologic therapies, and animal health products. Merck employs 67,000 people around the world and generates annual revenues of ~$57 billion.

On April 28th, 2022, Merck reported first quarter results for the period ending March 31st, 2022. Revenue grew nearly 50% to $15.9 billion, easily topping estimates by $1.26 billion. Adjusted net income of $5.4 billion, or $2.14 per share, compared very favorably to adjusted net income of $2.9 billion, or $1.16 per share, in the prior year. Pharmaceutical revenue increased 50% to $15.9 billion for the quarter, with Lagevrio sales adding $3.2 billion, up significantly from $952 million in the fourth quarter of 2021.

Keytruda, which treats cancers such as melanoma that cannot be removed by surgery and non-small cell lung cancer, remains the key driver of growth for the company, with sales growing 23% to $4.8 billion for the quarter.

Source: Investor Presentation

The product eclipsed the $17 billion mark for revenue in 2021, a 20% improvement from the previous year, and could reach $20 billion this year. Keytruda continues to see gains in market share across a number of indications. Sales for Merck’s HPV vaccine Gardasil increased 59% to $1.46 billion due to ongoing strong demand in China.

U.S. sales were higher as well, a change from prior quarters. Januvia/Janumet, which treats diabetes, fell 5% to $1.2 billion. This product will lose market exclusivity in the E.U. and China in the third quarter. Animal Health increased 4% to $1.5 billion due to higher demand for parasiticide, vaccines, and livestock products.

Merck provided an updated outlook for 2022 as well. The company expects adjusted earnings-per-share in a range of $7.24 to $7.36 per share, in-line with consensus estimates. Revenue is projected in a range of $56.9 billion to $58.1 billion, up from $56.1 billion to $57.6 billion previously.

Click here to download our most recent Sure Analysis report on Merck (preview of page 1 of 3 shown below):

Health Care Stock #6: Viatris Inc. (VTRS)

• 5-year expected annual returns: 11.0%

Viatris is a global healthcare company formed in November 2020 from a merger between Mylan and Pfizers’ UpJohn Business unit. The company offers a wide range of treatments and operates within three business segments called Brands, Complex Gx & Biosilimiars, and Generics. The brand segment is driven by well-known products such as Viagra and Dymista.

In addition, Viatris make generic versions of branded drugs once patent and other exclusivities expire. These medications share the same formula but cost less than “brand” medicine. Finally, Viatris offers a portfolio of diverse global biosimilars franchises, with approximately 150 marketing authorizations in over 85 countries focused on oncology, immunology, endocrinology, ophthalmology, and dermatology.

The company released first-quarter 2022 results on May 9th, 2022. Viatris reported net sales of $4.19 billion, which was down 1% compared to the last year due to a decline in sales in China.

Source: Investor Presentation

Complex generics and biosimilars grew 21% compared to the first quarter of 2021 due to the Restasis launch in February. Adjusted EBITDA came in at $1.59 billion, down 3% from last year. Free cash flow was $1.07 billion, up 34%, driven by net cash provided by operating activities of $1.4 billion.

Viatris is performing better than expected with its brand segment with products such as Lipitor and Effexor driving sales. The company has decided to sell its biosimilars business to Biocon Biologics for $3.3 billion, with $2 billion paid in cash and $1 billion in convertible preferred equity, giving the company a 12.9% stake in Biocon Biologics. The transaction is expected to close in the second half of 2022.

Click here to download our most recent Sure Analysis report on Viatris (preview of page 1 of 3 shown below):

Health Care Stock #5: UnitedHealth Group (UNH)

• 5-year expected annual returns: 11.3%

UnitedHealth dates back to 1974 when Charter Med was founded by a group of health care professionals looking for ways to expand healthcare options for consumers. UnitedHealth has certainly done that in the decades since and now offers global healthcare services to tens of millions of people via a wide array of products.

The company has two major reporting segments: UnitedHealth and Optum. The former provides global healthcare benefits to individuals, employers, and Medicare/Medicaid beneficiaries. The Optum segment is a services business that seeks to lower healthcare costs and optimize outcomes for its customers. UnitedHealth produces about $321 billion in revenue annually, making it one of the largest companies in America by either measure.

UnitedHealth reported first quarter earnings on April 14th, 2022, and results were once again much better than expected. The company posted adjusted earnings-per-share of $5.49, which was 14 cents better than expected. Likewise, revenue rose 14% year-over-year to $80.1 billion, beating estimates by $1.3 billion.

Revenue from UnitedHealthcare was up 13.6% year-over-year to $62.6 billion. Operating earnings, however, were down from $4.1 billion to $3.8 billion, despite the segment adding 1.5 million net customers in the past year. Revenue from Optum soared 19% to $43.3 billion, while operating earnings performed similarly, adding 19% to $3.2 billion. The company guided for adjusted earnings-per-share of $21.20 to $21.70 for this year.

Click here to download our most recent Sure Analysis report on UnitedHealth (preview of page 1 of 3 shown below):

Health Care Stock #4: Stryker Corporation (SYK)

• 5-year expected annual returns: 12.7%

Stryker is a global leader in the medical device sector. The company’s product lines include surgical equipment, neurovascular products and orthopedic implants.

In November of 2021, Stryker reorganized its businesses into two reporting segments: MedSurg and Neurotechnology, and Orthopaedics and Spine.

On April 28th, 2022, Stryker reported first quarter earnings results for the period ending March 31st, 2022. Revenue grew 8.2% to $4.28 billion, topping estimates by $85 million. Adjusted earnings-per-share of $1.97 compared to $1.93 in the prior year and was $0.03 higher than expected. Organic revenue was up 9.2% from the prior year. MedSurg and Neurotechnology had 10.8% organic growth.

Source: Investor Presentation

Mako continues to have a growing install base. Orthopaedics and Spine grew 7.2% saw strength in surgery related businesses due to a ramp up in procedures performed, especially in Europe. Stryker provided updated guidance for 2022. The company now expects organic revenue growth near the high end of its prior guidance of 6% to 8% for the year.

Coupled with supply chain issues, Stryker now projects adjusted earnings-per-share will come in close to the low end of its prior forecast of $9.60 to $10.00 per share.

Click here to download our most recent Sure Analysis report on Stryker (preview of page 1 of 3 shown below):

Health Care Stock #3: Cigna Corporation (CI)

• 5-year expected annual returns: 13.0%

Cigna is a leading provider of insurance products and services. The company’s products include dental, medical, disability and life insurance that it provides through employer-sponsored, government-sponsored and individual coverage plans.

The company has generated double-digit EPS growth over the past several years, even during recessions and the coronavirus pandemic.

Source: Investor Presentation

Cigna operates four business segments, including Evernorth, which provides pharmacy services and benefit management, U.S. Medical, which provides commercial and government health insurance, International Markets and Group Disability. Evernorth contributes 70% of annual revenues while Cigna Healthcare accounts for 24%. Cigna has annual revenues of ~$180 billion.

On May 6th, 2022, Cigna reported first quarter results for the period ending March 31st, 2022. For the quarter, revenue grew 7.4% to $44 billion, beating estimates by $530 million. Adjusted earnings-per-share of $6.01 compared to adjusted earnings-per-share of $4.73 in the prior year and was $0.83 above expectations.

Total pharmacy customers grew 6.4% to 107.4 million. Total medical customers grew 6.6% year-over-year to 17.8 million and was 4.2% higher quarter-over-quarter.

Cigna provided an updated outlook for 2022 as well. Revenue is still expected to be least $177 billion for the year. The company now projects adjusted earnings-per-share of at least $22.60, compared to $22.40 previously.

Click here to download our most recent Sure Analysis report on Cigna (preview of page 1 of 3 shown below):

Health Care Stock #2: Baxter International (BAX)

• 5-year expected annual returns: 14.0%

Baxter International develops and sells a variety of 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 April 28th, 2022, Baxter International reported Q1 2022 results for the period ending March 21st, 2022. For the quarter, the company reported adjusted earnings-per-share of $0.93, which represented a year-over-year increase of 22%.

Source: Investor Presentation

The company saw most of its sales and earnings growth from the acquisition of Hillrom, a company that makes smart technology, like patient beds and smart pumps, for hospitals. Baxter acquired Hillrom to pursue its vision to transform healthcare through technology, and management expects the acquisition to generate high single-digit ROIC by year five, and ~$250 million in cost synergies by year three.

Baxter reported 26% total sales growth and 3% sales growth in the business when excluding Hillrom. We expect Baxter to be positioned to perform well over the next few years with the Hillrom acquisition serving as a key catalyst. The acquisition should help the company to realize cost synergies and unlock growth opportunities across its geographic footprint.

We are forecasting $4.18 in 2022 earnings-per-share, driven by a full year of results from the Hillrom acquisition, and in addition, we are forecasting a 10% growth rate in earnings-per-share and dividends over the next five years.

Click here to download our most recent Sure Analysis report on Baxter (preview of page 1 of 3 shown below):

Health Care Stock #1: Pfizer Inc. (PFE)

• 5-year expected annual returns: 14.0%

Pfizer Inc. is a global pharmaceutical company that focuses on prescription drugs and vaccines.

Pfizer’s new CEO completed a series of transactions significantly altering the company structure and strategy. Pfizer formed the GSK Consumer Healthcare Joint Venture in 2019 with GlaxoSmithKline plc (GSK), which includes Pfizer’s over-the-counter business. Pfizer owns 32% of the JV. Pfizer spun off its Upjohn segment and merged it with Mylan forming Viatris for its off patent, branded and generic medicines in 2020.

Pfizer’s top products are Eliquis, Ibrance, Prevnar 13, Enebrel (international), Sutent, Xtandi, Vyndaqel/ Vyndamax, Inlyta, Xeljanz, and Comiranty. Pfizer had revenue of $81.3B in 2021.

Pfizer reported excellent Q4 2021 and full year results on February 8, 2022.

Source: Investor Presentation

For the quarter, company-wide revenue rose 105% to $23.838 billion, and adjusted diluted earnings per share rose 152% to $1.08. Total sales increased for Eliquis (+19%), Xtandi (+8%), Inlyta (+15%), Vyndaqel/ Vyndamax (+34%), Bosulif (+16%), Xeljanz (+4%), Hospital (+1%), and Biosimilars (+30%).

For its COVID-19 vaccine, Pfizer is the global leader with 70% market share. The company is expanding application of the mRNA technology. The drug giant is pursuing two protease inhibitor antiviral compounds, a flu vaccine, a shingles vaccine, a breast cancer therapy, hemophilia gene therapy, a Lyme vaccine, RSV Adult vaccine, and others.

Pfizer guided for $98B – $102B in revenue and adjusted diluted EPS of $6.35 – $6.55 for 2022.

Click here to download our most recent Sure Analysis report on Pfizer (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 U.S. healthcare companies are highly profitable, with long-term growth up ahead due to the aging population.

Shareholders of many healthcare stocks are likely to receive dividend increases each year. These 7 healthcare stocks pay dividends to shareholders, and are reasonably valued, leading to high expected returns over the next 5 years.

Other Reading

The Dividend Aristocrats list is not the only way to quickly screen for stocks that regularly pay rising dividends.