A dividend is more than passive income to investors. It’s a sign of confidence from management in the business itself. After all, management probably wouldn’t give you that cash to shareholders if they felt the company needed it more.
Do you know what’s better than a dividend? A rising dividend. Increasing the amount a company pays is the ultimate vote of confidence. These are the businesses you want to buy and hold.
Healthcare is a multitrillion-dollar industry, but a few familiar faces have excelled for decades — enough so that they’ve raised their dividends for 50 consecutive years or longer, making them Dividend Kings.
Here are three dividend-paying healthcare stocks you can buy and hold confidently today.
1. A company with a higher credit rating than America
Johnson & Johnson (NYSE: JNJ) is arguably the bluest blue chip stock on Wall Street. The company has a history dating back to the 1800s and is still a fixture in the healthcare industry. After spinning off its consumer products segment as Kenvue, the business is even more focused on pharmaceutical products, medical devices, and technology.
Want consistency? From 1980 to 2020, Johnson & Johnson never saw annual sales dip more than 6% from their high.
That consistency has made Johnson & Johnson a dividend machine. The company has churned out increasingly higher dividends for 62 consecutive years, persevering through wars, recessions, and pandemics along the way. The secret is ironclad financials. Johnson & Johnson has a AAA credit rating — higher than even the United States government. Additionally, the 66% payout ratio is plenty comfortable for such a steady producer.
Today, the stock yields a noteworthy 3% at its current share price. The stock trades at a forward P/E ratio of only 15. Admittedly, analysts are a little sour on Johnson & Johnson’s growth outlook, forecasting annual earnings growth of only 5% to 6% over the next three to five years. But ultimately, you’re paying for that consistency and quality. There might not be a better company to trust your money with.
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