These days, when it rains on Wall Street, it really pours. Stocks across the board have been sliding in response to another inflation report that could convince the Federal Reserve to raise interest rates even further.
Rising interest rates could push stocks even lower, or we could be near the start of a long market recovery. At uncertain times like these, it's best to stick with the most reliable stocks the market has to offer.
Here are two healthcare companies that are poised to produce rising profits even if the overall economy doesn't feel like cooperating.
Shares of CVS Health (CVS 0.19%) are slightly down this year, even though things are looking up for the healthcare conglomerate. Strong growth from a diverse collection of businesses allowed it to raise its dividend payout by 10% earlier this year. Now the stock offers a 2.2% yield, and investors can expect more raises in the years ahead.
CVS Health is one of the most reliable dividend stocks that you won't find on the Dividend Aristocrats list. That's because the company held its payout steady from 2017 through 2021 to help pay for its $69 billion acquisition of Aetna. This is a health insurer that collects insurance premiums from an estimated 35 million members.
You're more than likely familiar with this company's chain of over 9,000 retail pharmacies. Many of those pharmacies have physicians and nurse practitioners on staff. Sending Aetna members to a CVS pharmacy for care or a prescription lowers costs for CVS Health.
Combining a health insurance business with thousands of retail locations capable of providing healthcare services is also boosting profits. The company expects earnings per share to climb about 22% this year. As the only major U.S. insurer that also handles day-to-day healthcare services for its members at retail locations, the advantages allowing CVS Health to outperform seem extremely durable.
Abbott Laboratories (ABT 0.21%) stock skyrocketed last year in response to soaring sales of its COVID-19 tests. Test kits that are no longer flying off the shelves, and a market fearful of rising interest rates, have been a bad combination for Abbott's stock price. The stock is down around 25% from the peak it reached late last year.
Shares of Abbott offer a dividend that has risen 77% over the past five years, and the next five could be even better. The 1.8% yield this stock offers now could make big gains, thanks to a tiny device for diabetic patients. In May, the FDA granted clearance to the company's new continuous glucose monitor (CGM), the Freestyle Libre 3.
Abbott's new CGM is about the size of two stacked pennies, and it sticks to the back of a patient's upper arm for two weeks at a time. It's both smaller and longer-lasting than its nearest competitor, the G6 from DexCom. DexCom's long-delayed G7 device could provide some competition in 2024. By then, patients and physicians already comfortable with Abbott's device will be hesitant to switch.
In addition to diagnostics and devices for diabetic patients, Abbott builds heart replacement valves and other devices to keep our clocks ticking. In August, a clinical trial showed the company's HeartMate 3 heart pump raised the five-year survival rate for patients with advanced heart failure to 58%. This survival rate is in line with what cardiologists would expect from similar patients following a tricky transplant procedure.
Inflation or a recession can cause folks to spend less on a lot of things, but not the devices that keep them out of the hospital. Reliable cash flows make Abbott a great stock to buy on the dip and hold for the long run.