There are many ways the stock market can help you get rich, but not every method is right for you. If you're someone who enjoys keeping tabs on fast-moving industries, chasing popular growth stocks makes sense. For those of us who are more concerned with retiring comfortably, finding stocks we can rely on for steady gains over long periods is a much better strategy.
If there's one corner of the economy that you can rely on for steady growth, it's the healthcare sector. U.S. healthcare expenses grew 4.1% to $4.5 trillion, or $13,493 per person, in 2022. With roughly 10,000 baby boomers becoming eligible for Medicare each day, investors can expect this figure to continue climbing for many years to come.
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These three stocks don't offer the highest dividend yields, but they all offer at least 3% at recent prices. Each has a long history of steadily raising its dividend payout. Read on to see how they'll continue raising the quarterly payments they send to your brokerage account.
Johnson & Johnson
Last April, Johnson & Johnson (JNJ 0.35%) announced its 61st consecutive annual dividend raise. At recent prices, the stock offers a 3.1% yield.
NYSE: JNJ
Key Data Points
J&J's payout has risen by more than 25% over the past five years. That's an impressive pace when you consider it recently completed the spinoff of its consumer health division.
Now that J&J is a slimmed-down business propelled by sales of medical technology and pharmaceuticals, its pace of earnings growth is already accelerating. In 2023, adjusted earnings grew by 11.1% to $9.92 per share. J&J's dividend payout is currently set at an annualized $4.76 per share, so there's plenty of room for big payout bumps in line with earnings growth.
With total revenue that reached $85.2 billion in 2023, J&J has a huge footprint in the medical technology and pharmaceutical industries. For decades, J&J has used its size as an advantage to produce steady growth for its shareholders.
As one of just two companies with a better credit rating than the U.S. government, it's relatively easy for J&J to acquire new sources of growth that integrate well into its already large operation. For example, J&J acquired cardiovascular device maker Abiomed in 2022 for about $16.6 billion, and it seems likely to grow its footprint in this space. On March 26, The Wall Street Journal reported that the company was in talks to acquire Shockwave Medical, a company with a $12.1 billion market cap that also makes patented cardiovascular devices.
Medtronic
Medtronic (MDT 1.65%) doesn't sell pharmaceuticals, but its medical technology business is even bigger than J&J's by revenue. In May 2023, the company raised its dividend payout for the 46th year in a row. At recent prices, the stock offers a 3.3% yield.
NYSE: MDT
Key Data Points
The company's pace of dividend growth has slowed to 38% over the past five years, but it could pick up the pace again in 2024 and 2025. Surgical procedure volumes are more or less back to normal, and it seems the company has fixed supply chain disruptions that were limiting sales growth. The company reported total sales that grew 4.7% year over year during its fiscal third quarter that ended Jan. 26.
Medtronic's cardiovascular segment sales could get a significant bump in the months ahead, as the U.S. Food and Drug Administration recently approved the company's latest transcatheter aortic valve replacement system.
AbbVie
AbbVie (ABBV 1.01%) is a pharmaceutical powerhouse that offers a 3.5% yield at recent prices. The company has raised its dividend payout a tremendous 288% since spinning off from Abbott Laboratories in 2013.
NYSE: ABBV
Key Data Points
After more than two decades of post-approval market exclusivity, biosimilar competition finally began pressuring U.S. sales of AbbVie's lead drug Humira in 2023. Still, the stock looks like a smart buy for patient investors because it has plenty of new products to offset Humira losses and propel its dividend to new heights.
Last year, global Humira sales fell to $14.4 billion, but the losses are being offset by two drugs that launched in 2019. Sales of Skyrizi, a new psoriasis treatment, soared 50% year over year to $7.8 billion. Sales of Rinvoq, a new arthritis treatment, rose 57% to $4.0 billion last year and they're not finished climbing. In 2027, AbbVie expects this pair to generate over $17 billion in combined sales.
Of course, Skyrizi and Rinvoq aren't the only products with growing sales in AbbVie's lineup. With growing contributions from multiple sources, management expects total sales to grow at a high single-digit annual percentage from 2024 through 2029. With a constant influx of new growth drivers, this stock could end up delivering heaps of dividend income once you're ready to retire.
