Amgen (AMGN 0.17%) and Johnson & Johnson (JNJ -0.14%) have quite a few things in common. They both rank among the most attractive healthcare dividend stocks. Both companies have long track records of success. Amgen and J&J each have promising new products along with older products that are weighing on sales.

With less than two weeks remaining in 2019, Amgen has been the bigger winner so far this year, more than doubling the gain delivered by Johnson & Johnson. But which of these two healthcare stocks is the better pick for long-term investors? Here's how Amgen and J&J compare. 

Black and white photo of two test tubes in a rack

Image source: Getty Images.

The case for Amgen

Amgen faces intense competition from biosimilars and generic drugs for several of its top products. As a result, sales are sinking for Neulasta, Epogen, and Sensipar. The biosimilar version of Epogen is also negatively affecting sales of Aranesp.

However, Amgen's top-selling drug, Enbrel, is holding its own. Even better, the big biotech has several rising stars in its lineup. Osteoporosis drugs Prolia and Xgeva continue to deliver solid sales growth. Another new osteoporosis drug, Evenity, is picking up strong momentum, as are migraine drug Aimovig and Amgen's biosimilars.

The company also now has a great new addition to its lineup with Otezla. Amgen recently bought the blockbuster psoriasis and psoriatic arthritis drug from Bristol-Myers Squibb for $13.4 billion. Regulators required the sale of Otezla to clear the path for BMS's acquisition of Celgene, which closed last month.

Amgen's pickup of Otezla also bolstered its late-stage pipeline. The drug is being evaluated in phase 3 studies targeting four other indications. Most of the company's other late-stage programs are also pursuing additional indications for already-approved drugs. Amgen does have a handful of promising new products in late-stage development, though, including heart failure drug omecantiv mecarbil and asthma drug tezepelumab.

Even with continued strength for some of its current products plus boosts from Otezla and pipeline candidates, Amgen's earnings growth trajectory is likely to taper off somewhat because of the headwinds for its older products. Wall Street analysts project average annual earnings growth of nearly 8% over the next five years compared with average growth of close to 11% over the last five years.

However, Amgen could still deliver a double-digit-percentage total return to investors on an annual basis thanks to its dividend. The company's dividend currently yields over 2.6%. Amgen's dividend payout has more than doubled over the past five years.

The case for Johnson & Johnson

There's a pretty good argument to be made that Johnson & Johnson's moat is eroding. Sales for blockbuster drug Remicade are falling in the face of biosimilar competition. J&J is dealing with lawsuits over its opioid drugs and allegations that its talc-based products contained asbestos.

Even with these troubles, though, Johnson & Johnson still has a lot going for it. The company continues to generate lots of cash from its three multibillion-dollar business segments -- consumer, medical devices, and pharmaceutical. J&J's pharmaceutical unit is the strongest of these businesses, thanks to successful products such as immunology drugs Stelara and Tremfya and cancer drugs Darzalex and Imbruvica and new depression drug Spravato.

Johnson & Johnson has also benefited from key acquisitions. The 2017 buyout of Actelion brought pulmonary hypertension drugs Opsumit, Tracleer, and Uptravi into its pharmaceutical lineup. J&J's acquisition of surgical robot systems maker Auris Health earlier this year bolstered the company's medical devices segment's growth prospects.

As is the case with Amgen, many of J&J's late-stage pharmaceutical programs are targeting additional indications for already-approved drugs. But J&J also has new candidates in late-stage testing, the most promising of which include lung cancer drug lazertinib and a BCMA cell therapy for treating multiple myeloma. 

J&J is similar to Amgen in another way in that its growth is likely to decline. Analysts think the healthcare giant will deliver average annual earnings growth of close to 6% over the next five years, down from nearly 10% over the past five years.

Of course, Johnson & Johnson's dividend makes the lower growth rate less concerning. The company is a Dividend Aristocrat with 57 consecutive years of dividend increases. Its dividend currently yields over 2.6%.

Better buy

Which of these stocks is the better pick? If you're an income investor, my view is that Johnson & Johnson is the winner between these two stocks. J&J's track record for dividends combined with its diversification across the healthcare sector makes it moderately less risky than Amgen.

If you're a growth or value investor, I don't think either of these stocks is a great pick. Neither Amgen nor J&J is likely to generate awe-inspiring growth. Neither of the stocks is a bargain right now. My recommendation for investors looking for tremendous growth or value is to look elsewhere.