It's January and you're looking for stocks you can count on for the long haul. I suggest looking at the consumer healthcare industry, a market that is estimated to double from its $3.3 trillion value in 2020 to $6.6 trillion by 2028.
Healthcare is complex with many players, but identifying the blue-chip stocks that have evolved with the industry over time can lead to peace of mind and stellar returns. Here are five to consider.
Image source: Getty Images.
Pfizer
Pharmaceutical giant Pfizer (PFE -1.05%) is one of the largest drug companies in the world and a leader in mRNA technology for producing vaccines. Of course, its best-known one is currently combating the COVID-19 variants, which added an estimated $36 billion to its 2021 revenue. For perspective, Pfizer's whole business did $42 billion in 2020 -- before the COVID-19 vaccine.
The company has grown earnings per share at an average rate of 5% over the past decade, driven by a steady drug pipeline that produces enough profits to buy back stock and pay investors a dividend (currently yielding 2.9%). The COVID-19 vaccine could be a multi-year tailwind that helps set up Pfizer's pipeline for years of future growth.
Abbott Labs
Healthcare conglomerate Abbott Laboratories (ABT -3.03%) concentrates on consumer health products like baby formula and nutrition shakes, medical devices, established pharmaceuticals, and diagnostics systems, including a COVID-19 testing device. It has a long dividend-paying history -- and at its current price, the stock offers a dividend yield of 1.4%.
The company dramatically shook its business up by spinning off most of its pharmaceutical business as AbbVie in 2013 and then buying medical device company St. Jude for $25 billion in 2017. As a result, revenue has grown at an average rate of 8% over the past five years. The company has accelerated growth in recent years by focusing on high-demand applications in cardiovascular health and diabetes.
Beckton, Dickinson
Medical technology company Beckton, Dickinson & Company (BDX 0.52%) creates and sells various medical products, including supplies, devices, diagnostic and analyzer equipment, and much more. You can find its products in virtually all areas of healthcare. The company is about to become a Dividend King after raising its dividend for 49 consecutive years.
Beckton, Dickinson has expanded at an impressive rate for a blue-chip stock; revenue growth has averaged 10% annually over the past decade. The company doesn't get much attention from the retail investor crowd, but it should. Because healthcare professionals use many of its products repeatedly (think needles, catheters, etc.), the company likely will keep on performing for years to come.
UnitedHealth
As one of the largest healthcare companies in the world, UnitedHealth Group (UNH 2.15%) is a conglomerate that operates multiple businesses, including health insurance and care networks, software and IT products, analytics, and pharmacy care. The company operates in 130 countries, making it a global business that can give investors broad exposure to the healthcare industry.
Despite its massive $435 billion market cap, the company has grown at a solid clip. Revenue has increased at an average rate of 10% over the past decade while earnings per share have grown at an average of 14%. Investors also get a dividend that yields 1.3% at the current share price. UnitedHealth's massive size could make it harder to maintain that growth rate over the long term, but the stock could anchor any conservative portfolio.
Johnson & Johnson
As one of the best-known healthcare companies among consumers, Johnson & Johnson (JNJ 0.22%) makes a range of consumer products, including Tylenol, Band-Aids, Motrin, Benadryl, and more. Ironically, its pharmaceutical and medical device segments overshadow the consumer products, contributing more than 80% of its total revenue.
Johnson & Johnson has the longest dividend growth streak on this list; this Dividend King's payout has increased 59 years in a row. The company's business has been very steady, growing both revenue and earnings per share at a low-single-digit rate over the past decade. Investors could see some further upside in the years ahead after J&J spins off its consumer products brands, leaving shareholders with its two strongest assets -- pharmaceuticals and medical devices -- which could perform better on their own.
