Healthcare is a complex and dynamic sector, and this space features a diverse range of companies with something to offer investors of all risk tolerance levels and interests. From pharmaceutical and biotech businesses to medical device leaders, as a beginner investor, you have plenty of stocks to choose from as you build out your portfolio.
If you are just starting your investing journey and have a considerable time horizon of 40 years or more, these are two names to take a long, hard look at when you construct your basket of stocks.
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1. Intuitive Surgical
Intuitive Surgical's (ISRG 0.02%) flagship product line of da Vinci surgical systems (including the latest da Vinci 5) enables complex, minimally invasive surgeries that help drive the company's profitable business. The company's Ion endoluminal system is a newer product line designed for minimally invasive lung biopsies. While smaller than the da Vinci business, it's also growing rapidly and represents a significant adjacent market opportunity.
Even though a single surgical system involves a substantial investment for any hospital or medical provider, Intuitive Surgical actually makes most of its revenue and profits from recurring sources. Its most significant sources of recurring revenue are instruments and accessories needed for the system to operate. These items are single-use or have limited lifespans and are necessary for every surgical procedure performed on the da Vinci platforms. Instruments and accessories delivered over $1.5 billion in revenue in the third quarter of 2025 alone, thanks to rising procedure volumes.
Intuitive Surgical's service contracts for the large and growing installed base of systems provide a significant and reliable recurring revenue stream. That business delivered about $396 million in revenue in Q3, while system sales accounted for $590 million. In total, Intuitive Surgical generated $2.5 billion in revenue in its most recent three-month period, up 23% from one year ago.
NASDAQ: ISRG
Key Data Points
Worldwide procedures grew by approximately 20% year over year in Q3. Broken down by product line, Da Vinci procedures grew approximately 19% and Ion procedures rose by 52%. Intuitive Surgical's installed base of systems grew to 10,763 da Vinci systems and 954 Ion systems, up 13% and 30% respectively year over year. Importantly, the company has a robust history of profitability, and this quarter was no exception. Intuitive Surgical delivered $704 million on the bottom line in Q3, a 25% spike in net income from the year-ago period.
The rapid uptake and placement of the latest da Vinci 5 system is a significant driver of current growth. Hospitals and healthcare systems purchase these fully featured systems, which signals their commitment to the new technology and ends up contributing to higher system revenue. Intuitive Surgical is the dominant market leader in robotic surgery and retains its significant competitive advantage. That advantage comes from high switching costs for hospitals, an extensive surgeon training infrastructure, and a strong patent portfolio.
There remains a large white space for robotic surgery adoption because a notable percentage of eligible procedures are still performed using traditional methods. The surgical robotics company is also expanding into new specialties and international markets.
New investors who want to benefit from the durable growth story of Intuitive Surgical and have a decades-long buy-and-hold horizon can find plenty to like about this top healthcare stock.
2. Johnson & Johnson
Johnson & Johnson (JNJ +0.35%) is among an elite group of stocks categorized as Dividend Kings, and has increased its dividend for 63 consecutive years. If you have a 40-year horizon and reinvest these growing dividends, you could significantly boost your total returns over time and provide a reliable stream of passive income to your portfolio later on.
Johnson & Johnson's dividend has grown by an average of approximately 6% per year over the last decade, and its latest quarterly dividend was declared at $1.30 per share, which was a 4.8% increase. The stock yields about 2.8% based on the current share prices at the time of this article.
Johnson & Johnson's "innovative medicine" segment has been a strong performer and key growth engine, despite headwinds from patent expirations on certain older blockbuster drugs. In Q3, this segment delivered $15.56 billion in net sales, a 6.8% increase year over year. That growth was largely driven by strong demand for its oncology and immunology drugs.
For example, Darzalex (multiple myeloma) sales rose over 20% and Tremfya (psoriasis and inflammatory bowel disease) sales jumped over 40%. Strong contributions also came from Erleada; new cancer drugs like Carvykti, Tecvayli, and Talvey; and Spravato, for treatment-resistant depression.
NYSE: JNJ
Key Data Points
The medtech segment has also been winning big for Johnson & Johnson of late, delivering $8.43 billion in sales in Q3, a 6.8% increase year over year. The segment's growth was primarily fueled by its electrophysiology cardiovascular products and the performance of acquired businesses like Abiomed and Shockwave Medical. Overall, Q3 sales came in at $24 billion, a 6.8% year-over-year increase, and net earnings of $5.2 billion represented a 91% jump from the prior year's quarter.
As one final note, Johnson & Johnson is one of just two companies in the U.S. with a AAA credit rating from S&P Global. This is the highest possible credit rating, and indicates the lowest risk of default and the highest creditworthiness. Investors just starting their portfolio and looking to add a quality healthcare stock to the mix should certainly take a look at this business.
