Few companies can remain in business for more than 100 years, and the ability to do so says a lot about a corporation. Of course, past performance isn't a guarantee of future success, but for investors seeking "forever stocks," it might be worth considering those companies that have already stood the test of time.
Let's look at two healthcare giants that have been around for over 100 years and will likely remain in business for much longer: Johnson & Johnson (JNJ 1.30%) and Eli Lilly (LLY -2.37%). Not only do these two drugmakers have solid businesses, they are also excellent dividend-paying stocks. Let's dig in.
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1. Johnson & Johnson
Johnson & Johnson has been around a while, and it has also been raising its yearly dividend payouts for a long time. The healthcare giant is a member of the exclusive club of Dividend Kings -- companies that have hiked their dividends for at least 50 consecutive years. J&J probably won't stop rewarding shareholders anytime soon as the company's business still looks solid.
Its pharmaceutical business boasts a long list of blockbuster products. And while some of these medicines will lose patent protection relatively soon, giving way to biosimilar competition, others will continue to grow their sales for the foreseeable future. For instance, sales of Johnson & Johnson's immunosuppressant Stelara jumped by 22.2% year over year in the third quarter to $2.4 billion.
Stelara will lose patent protection in the U.S. and Europe in 2023 and 2024, respectively. Meanwhile, Darzalex, a cancer medicine marketed by Johnson & Johnson, still has at least seven years to go before losing patent protection. In the third quarter, Darzalex's sales jumped by 43.7% year over year to $1.6 billion.
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Johnson & Johnson can count on new approvals to replace drugs whose sales will decrease due to biosimilar competition. The company boasts 58 programs in its late-stage pipeline alone. Johnson & Johnson typically records at least a few regulatory approvals every single quarter. During the third quarter, the drugmaker scored three regulatory nods.
The company is currently in the process of spinning off its consumer health section, a transaction it expects to complete by the end of this year. That business has faced ongoing litigation regarding its talc-based products. While the loss of this division means Johnson & Johnson will become less diversified, it should become a more focused business and deliver more robust top-line growth as a result. In addition, its medical devices business helps diversify its revenue base.
Johnson & Johnson currently offers an above-average dividend yield of 2.50% and a conservative payout ratio of 45%. A healthy business capable of surviving downturns coupled with a solid dividend make this pharma stock worth stashing in your portfolio for a long time.
2. Eli Lilly
Eli Lilly is perhaps best-known for its suite of diabetes products. The best-selling of the bunch is Trulicity, which helps patients control their blood glucose levels. In the third quarter, sales of Trulicity soared 45% year over year to $1.6 billion. Eli Lilly is also constantly looking to innovate in the area of diabetes care.
One of its most exciting pipeline candidates is Basal Insulin-Fc (BIF), a once-weekly insulin product for type 2 diabetes patients. Patients with type 2 diabetes who need insulin typically take it daily. A weekly option that delivers the same health outcomes would be preferable.
BIF isn't the only promising candidate in Eli Lilly's pipeline. In December, the company submitted regulatory applications for tirzepatide in the U.S. and Europe. Tirzepatide is a glucagon-like peptide 1 (GLP-1, a class of drugs that help patients with type-2 diabetes produce the optimal amount of insulin). According to the research company Evaluate Pharma, Tirzepatide is the most valuable research and development product in the pharmaceutical industry with a net present value of $22.1 billion.
Tirzepatide could hit the market sometime this year, and this new product, along with others Eli Lilly will eventually launch, should only strengthen its already strong lineup. In the third quarter, the company's total revenue came in at $6.8 billion, 18% higher than the year-ago period.
Eli Lilly's dividend yield of 1.39% isn't very high although it is still above the S&P 500's average of 1.27%. The company's dividend payout ratio of 49.95% is reasonable, too. Most importantly, this company -- and its dividend -- aren't going away anytime soon thanks to a robust business capable of consistently delivering strong financial results. That makes it an excellent buy-and-hold stock.
