There are several industries and sectors that are known for their dividends. Utilities and real estate investment trusts definitely come to mind. But so does the pharmaceutical industry. Big pharma companies have been favorites for income investors for a long time.

We asked three Motley Fool contributors to pick pharma stocks with juicy dividends to buy. Here's why they chose AbbVie (ABBV 1.80%), Johnson & Johnson (JNJ -0.29%), and Pfizer (PFE 0.87%).

A piggy bank in front of a chalkboard with "Dividends" written on it.

Image source: Getty Images.

Everything you'd want in a dividend stock

Keith Speights (AbbVie): What do investors want in a dividend stock? Obviously, an attractive dividend yield is near the top of the list. The ability to keep the dividends flowing is a must. A strong track record of dividend increases is important. Solid growth prospects and a reasonable valuation would also be nice to have. AbbVie checks off all of these boxes.

The big drugmaker's dividend yield currently stands at nearly 4.4%. AbbVie shouldn't have any problems funding its dividend program. It generated a whopping $18.2 billion in free cash flow over the last 12 months. The company reported cash, cash equivalents, and short-term investments totaling $8.6 billion as of June 30. 

There aren't many pharmaceutical companies with better track records of dividend increases than AbbVie. The company is a Dividend Aristocrat with 49 consecutive annual dividend hikes.

What about growth prospects? First, AbbVie continues to deliver robust growth. The company's revenue jumped 19.3% year over year in the second quarter of 2021. Total sales for top-selling drug Humira rose despite biosimilar competition in international markets. Several products that were picked up with AbbVie's acquisition of Allergan are contributing to growth as well.

Granted, AbbVie expects its overall revenue will decline in 2023 when biosimilars to Humira enter the U.S. market. However, that should only be a temporary issue. The company thinks it will return to growth in 2024 with robust growth throughout the rest of the decade.

This optimism stems from AbbVie's confidence in its product lineup. In particular, the company projects strong momentum for blood cancer drugs Imbruvica and Venclexta and newer autoimmune disease drugs Rinvoq and Skyrizi. 

In addition to its great dividend program and solid growth prospects, AbbVie's valuation remains attractive. Shares currently trade at only 9.6 times expected earnings. 

A solid dividend backed by a strong balance sheet 

Prosper Junior Bakiny (Johnson & Johnson): Income-oriented investors tend to look for companies with a long history of dividend increases, solid revenue and earnings growth prospects, and the financial fortitude to survive even the toughest economic downturns. Johnson & Johnson displays all three characteristics. 

First, the healthcare giant is a Dividend King, having raised its payouts for 59 years in a row. Second, Johnson & Johnson boasts a diversified business that includes its pharmaceutical, medical devices, and consumer health segments. Within its pharmaceutical division, the company develops drugs in a raft of different areas, including oncology, immunology, infectious diseases, and neuroscience. 

Johnson & Johnson markets 28 products or platforms that generate more than $1 billion in sales every year. Meanwhile, the company has a rich late-stage pipeline. Thanks to brand new drugs or label expansions on existing ones, Johnson & Johnson can keep growing its revenue from its pharmaceutical unit. The company earned five regulatory approvals during the second quarter.

Within its consumer division, Johnson & Johnson's products benefit from strong brand names (think Neutrogena, Tylenol, Benadryl, Listerine, and others). Its medical devices business also looks to have a bright future, given that this entire industry will continue growing.

Third, Johnson & Johnson has a Standard & Poor's credit rating of AAA, which is the highest rating possible and is a sign of the company's financial fortitude. The drugmaker is unlikely to succumb to financial troubles and resort to slashing its dividends even amid a severe downturn. Indeed, Johnson & Johnson announced a 6.3% dividend increase in April 2020 -- as the COVID-19 pandemic was already wreaking havoc

In its more than 100 years in business, this healthcare giant has survived more than a few economic recessions. Johnson & Johnson's current yield of 2.3% beats the S&P 500's yield of 1.3%. The company's conservative 47.7% cash payout ratio means it has more than enough room to sustain solid dividend increases.

These facts paint a clear picture: Johnson & Johnson is an excellent stock to own for dividend investors. 

A dividend stock with a top-selling COVID-19 vaccine

Zhiyuan Sun (Pfizer): Not only does Pfizer have an amazing pipeline, a solid franchise of drugs on the market, and a fantastic COVID-19 vaccine, but it also pays a solid dividend with a yield of 3.1%. The company can more than sustain its rate of returning capital to shareholders with a payout ratio of 65%. 

Pfizer could very well hike its dividend due to the success of its COVID-19 vaccine Comirnaty, which recently received full approval from the U.S. Food and Drug Administration. The company has shipped over 1 billion doses of Comirnaty since December 2020.

During the second quarter of 2021, Pfizer's revenue increased by a stunning 92% year over year to nearly $19 billion. At the same time, its earnings per share grew by 73% to $1.07. Due to high vaccine demand, Pfizer raised its full-year guidance to $79 billion in revenue and $4 in EPS, up from $71.5 billion in sales and $3.60 in EPS as stated in previous earnings releases. 

Excluding its coronavirus vaccine, revenue from the company's core biopharma segment, consisting of oncology, internal medicine, hospital products, inflammation and immunology, and rare disease drugs, increased by 10% year over year. You can count on Pfizer to continue its path of innovation, as the company plans to invest more than $10 billion this year on research and development. On Aug. 23, Pfizer announced the $2.3 billion acquisition of Canadian biotech Trillium Therapeutics. The deal gives Pfizer two lead immune checkpoint inhibitors for treating hematological malignancies.  

Overall, Pfizer stock is still very cheap at 12.2 times forward earnings. On top of all this, the company has a stock buyback program, with over $5.3 billion left to repurchase, so there's also room for capital appreciation. It is a hot dividend stock you don't want to miss.