Some people chase significant, fast returns -- the get-rich-quick approach. But in reality, the steady effects of long-term compounding usually create life-changing wealth. Successful investing can be as simple as owning stocks of high-quality businesses that have grown consistently for many years.
Healthcare is a superb hunting ground for these stocks and include some blue-chip stocks. The industry is worth $4.3 trillion in the United States alone, and caring for and treating people should always be a priority for society. Here are three top-notch healthcare stocks you can buy and hold indefinitely in just about any diversified portfolio.
1. A dividend growth conglomerate
Johnson & Johnson (JNJ -0.14%) is one of the biggest names in healthcare; it's a three-headed conglomerate that sells consumer products, medical devices, and pharmaceuticals.
The company's rich portfolio of product brands has supported steady growth for decades. Have a cut? Put a Band-Aid on it. Know someone with Crohn's Disease? They're probably taking Stelara. You'll also find Johnson & Johnson's products in the hospital; the company sells billions of dollars worth of orthopedics, surgical tools, supplies, and more each year.
JNJ Revenue (TTM) data by YCharts.
Healthcare is always in high demand, and Johnson & Johnson's decades of growth and dividend increases reflect that. The company has raised its dividend for 60 years in a row, a phenomenal feat for a public company. It doesn't have to be complicated; investors can hop on board and let the company do what it does -- churn out steady growth and profits year after year.
In a rare shakeup, shareholders will get the bonus of a new stock holding when the company spins off its consumer products segment as its own company, Kenvue, by November of this year.
2. An evolving pharmaceutical giant
The pharmaceutical industry plays a massive role in the broader healthcare sector, and AbbVie (ABBV -3.82%) is one of the most prominent players in the field. Its flagship drug Humira has consistently topped the charts, including a whopping $15.6 billion through just nine months of 2022.
It's been just over a decade since Abbott Laboratories spun off its pharmaceutical business as AbbVie, and the company has thrived on its own. You can see how sales have soared and the company's dividend with it.
ABBV Revenue (TTM) data by YCharts.
The patents that protect pharmaceutical companies from copycats eventually expire, and Humira will face competition in the U.S. starting this year. However, AbbVie has invested heavily in expanding its business recently, including acquiring Botox-owner Allergan for $63 billion and ramping up sales of emerging products like Rinvoq and Skyrizi. Humira accounted for 36% of AbbVie's total sales this year.
Yet, analysts believe the company's earnings-per-share (EPS) will still grow by an average of 4% annually over the next three to five years. Mustering growth despite losing exclusivity for Humira underlines how wonderful a business AbbVie is and why investors can own the stock with confidence.
3. An insurance giant and industry leader
As important as healthcare is, it can be painfully expensive. That's where insurance from companies like UnitedHealth Group (UNH -0.05%) comes in. UnitedHealth is a behemoth; it trades at a market capitalization of $457 billion and does more than $300 billion in annual sales. It's one of the world's largest insurance companies, providing care to more than 149 million people. In addition, its Optum segment delivers services, data insights, and prescriptions to more than 100 million patients.
UNH Revenue (TTM) data by YCharts.
Healthcare's continually swelling costs have translated to immense growth for UnitedHealth; the company multiplied its revenue over the past decade and became a solid dividend stock. Shareholders have received more dividends each year for the past 13 years.
Healthcare is a multitrillion-dollar industry. The population is growing, and there are millions of people that UnitedHealth doesn't care for yet. Analysts are looking for UnitedHealth's EPS to grow by 15% annually over the next three to five years. The company's massive size makes it an industry titan that could grow larger over time, maybe becoming a trillion-dollar company someday.
