Investors' mindsets around what stocks to buy change as they age and their portfolios grow. These investors tend to play it safer with their investment choices as they get older because their picks don't have as much time to recover from potential setbacks when compared to someone with decades of investing time still ahead.
But playing safer doesn't mean investors shouldn't keep trying to grow and build their portfolios. They just have to be more strategic in their choices. For instance, the healthcare sector is a great space to look for a mix of safety and upside. It will always be a crucial industry and one with steady growth.
For investors looking for great buy-and-hold-forever candidates, here are three healthcare giants with staying power and profitable business models that pay you dividends while you hold them.
1. Pfizer
Pharmaceutical giant Pfizer (PFE 1.52%) has been in the game for a long time, evolving over the years to become one of healthcare's most active merger and acquisition players. Importantly, it's managed to stay near the top of the industry and saw tremendous growth as a leading manufacturer of COVID-19 vaccines and treatments. But the stock is feeling the hangover from that gold rush ending, which puts investors in a predicament.
NYSE: PFE
Key Data Points
The company's revenue and earnings are plummeting, and Wall Street has sent the stock to near decade-lows. Pfizer has not only lost most of its pandemic-related sales, but is also facing some patent expirations over the coming years which will also hurt as cheaper generics flood the market.
So why is Pfizer a great buy-and-hold option? The company won seven new FDA approvals last year alone, which will help seed growth for the future. Additionally, it just completed a whopping $43 billion acquisition of oncology drug company Seagen, which injects more long-term potential into Pfizer's pipeline.
While you wait out this transition phase, Pfizer pays a dividend yielding 6.2% at its current share price, and management has confirmed its intent to grow that payout with an increase in December.
2. UnitedHealth Group
It's hard to access America's healthcare and not bump into UnitedHealth Group (UNH +2.67%). The company is one of the United States' largest health insurance companies. It provides various other services, including pharmacy benefit management (PBM), consulting, healthcare technology, and data analytics. To put it differently, UnitedHealth is a core cog in America's $4.5 trillion healthcare machine.
NYSE: UNH
Key Data Points
The stock has returned a remarkable 440,000% over its lifetime. It isn't likely to repeat that as it approaches a $500 billion market cap. However, there is still plenty of growth for investors. Healthcare is so big that there is an ocean of expansion in front of UnitedHealth, and the company's enormous size and deep pockets make it hard to compete with.
Analysts believe the company will grow earnings by an average of 11% annually over the long term, and the company's dividend yields 1.5% and has been increased for 14 straight years. Steady growth and just a 26% dividend payout ratio mean UnitedHealth could be a dividend rockstar for decades.
3. Abbott Laboratories
Healthcare conglomerate Abbott Laboratories (ABT 3.14%) has a history spanning nearly 150 years. An employee at the company, Grace Groner, died a multi-millionaire by simply buying three shares of the stock in 1935 and holding and reinvesting the dividends for decades. Abbott Labs looks slightly different today than back then, but this is still a gem of a healthcare stock.
NYSE: ABT
Key Data Points
The company brings in $40 billion annually, selling various products worldwide. Its business units span nutrition and consumer products, diagnostics technology, medical devices, and established pharmaceuticals (generics). Abbott Labs is also a legendary Dividend King, with a 52-year streak of consecutive increases.
Abbott Labs is a get rich slowly stock. Even after over a century in business and 52 straight annual dividend increases, the company's dividend accounts for just half of Abbott's earnings, leaving room for future raises. Analysts also believe the business can grow its bottom line by over 8% annually. Add another 2% in dividend yield, and investors could see double-digit returns, doubling their investment every seven years. Be like Grace Groner and buy and hold Abbott Labs.
