Are you worried about inflation eating into your savings? Perhaps you're nervous that the Federal Reserve's plan to fight inflation with rising interest rates will lead to a recession.
At times like these, it can seem like there aren't any good options to invest in, but this isn't the case. Plenty of well-established businesses have operated successfully through economic downturns that make recent conditions seem like a walk in the park.
These three leading healthcare businesses have long histories of making dividend payments and raising their payouts at least once every year. Investors who buy them now can expect steadily rising payments into and throughout their retirement years.
Abbott Laboratories
Shares of Abbott Laboratories (ABT 0.43%) have fallen more than 20% from the peak they reached in January. Throughout 2021, soaring sales of its COVID-19 tests pushed the stock higher, but now, demand for those diagnostics has fallen, and so has the stock. At the current share price, its dividend yields 1.7%, but that yield could rise sharply in the years ahead.
In addition to its industry-leading diagnostics business, Abbott Laboratories has a medical devices arm that markets a variety of products, including continuous blood glucose monitors (CGMs) that are increasingly popular among people with diabetes and the physicians who treat them.
Abbott's latest FDA-approved CGM, the Freestyle Libre 3, is significantly smaller than competing devices. It also has built a strong lead in the U.S. market because its nearest competitor, the G7 from Dexcom, still hasn't received clearance from the FDA.
Abbott Laboratories has made consistent dividend payments since 1924, and it's been 50 years since it went more than a year without raising its payout at least once. Given the company's strong commitment to its shareholders and its capacity for raising its payouts, holding on to this stock for the long run could add lots of extra cash to your brokerage account.
Johnson & Johnson
Johnson & Johnson (JNJ -0.04%) is another well-diversified healthcare company with a legendary dividend program. In April, the company raised its payout for the 60th year in a row.
Its collection of healthcare businesses has allowed J&J to reliably grow its bottom line, but not quickly enough to please everybody. This is why it will spin off its consumer goods segment into a separate company in 2023. The business that remains will be able to focus on the rapidly expanding markets for innovative medical devices and new drugs.
At recent prices, shares of J&J offer a 2.5% yield, and investors can expect the combined dividends after next year's spinoff to provide the same value or at least a little bit more. Over the past year, the company used just 57% of its free cash flow from operations to make dividend payments. This means the company can comfortably raise its payout and invest in its future at the same time.
AbbVie
AbbVie (ABBV -3.13%) is a biopharmaceutical company that was spun off from Abbott Laboratories in 2013. Since then, it's been able to raise its payout by more than 250% with help from blockbuster drug sales.
AbbVie's lead product, Humira, was the world's top-selling drug in 2020, and second only to Pfizer's COVID-19 vaccine in 2021. In 2023, Humira will begin losing ground to competition from several biosimilar versions the FDA has already approved.
This is a great dividend growth stock to buy now because AbbVie has expertly invested its Humira profits into cash-generating machines that will more than offset those pending sales declines. For example, in 2019, the company launched Rinvoq for arthritis and Skyrizi for psoriasis. These drugs are already on pace to generate a combined $6 billion in sales this year, and AbbVie thinks they'll reach a combined $15 billion by 2025.
Despite more than tripling its annual payout since 2013, AbbVie only needed 43% of its free cash flow from operations to meet its dividend commitments over the past year. As such, the drugmaker has plenty of room to boost its payout in the years to come.
