If you are a new investor, healthcare stocks can provide numerous diversification benefits to your portfolio and help enhance its returns in the long run. Healthcare stocks have historically displayed lower volatility compared to the overall market, and pairing healthcare investments with more cyclical stocks as you construct your basket of investments can help you to balance the risk and growth potential of your portfolio.
Here are two healthcare stocks to consider buying and holding for years if you are a new investor starting to put cash to work in the market.
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1. DexCom
With over 500 million people suffering from diabetes globally, the market for CGM systems is substantial and is expected to continue growing. DexCom (DXCM 2.19%) is a leading player in the diabetes care market and has been for decades thanks to the success of its industry-leading continuous glucose monitoring (CGM) devices.
DexCom's latest products, such as the G7 and One+ CGMs, are seeing accelerated adoption due to broader insurance coverage and continued international expansion. The company has also expanded its market with Stelo, a first-of-its-kind over-the-counter CGM for type 2 non-insulin users. DexCom has delivered solid financial performance in 2025, but the stock has fallen about 25% since the beginning of 2025 and is trading near five-year lows.
Investors may be concerned about the growing popularity of GLP-1 weight loss drugs, which can also help manage diabetes. The market is worried that these drugs could reduce future demand for DexCom's devices, though CGMs should still play a notable role in managing patients' overall health. DexCom has also faced some regulatory and legal challenges in 2025 that it continues to address, but management has said they do not expect these developments to have a substantial impact on their financials.
NASDAQ: DXCM
Key Data Points
At its core, this is a mature, profitable company that maintains a robust presence in a vast and growing addressable market. That reality is reflected in DexCom's financials. In the third quarter of 2025, DexCom generated revenue of $1.21 billion, a 22% increase year over year, and adjusted earnings per share (EPS) reached a record $0.61.
The company added nearly $400 million in cash and equivalents during the quarter, and ended the three-month period with over $3.3 billion in cash reserves. Importantly, DexCom's GAAP (generally accepted accounting principles) net income totaled $284 million in the third quarter vs. a rare net loss one year ago.
There are plenty of long-term growth levers for DexCom to benefit from too. The launch of the Stelo biosensor that allows DexCom to tap into the large market of type 2 diabetes patients who do not use insulin is notable, because this cohort of patients remains a significant portion of the total diabetes population but historically has had low CGM penetration. The continued expansion of insurance coverage by major U.S. pharmacy-benefit managers has also significantly increased the number of eligible patients that can use DexCom's products.
Dexcom's international revenue was also up 22% in Q3 alone. It's also the case that the increasing global burden of diabetes and other metabolic health conditions, partly due to aging populations, ensures a persistent and expanding need for glucose monitoring solutions like DexCom's. If you're a long-term investor and looking to build out your portfolio of healthcare stocks, DexCom certainly looks like one that's worth considering.
2. Abbott Laboratories
Abbott Laboratories (ABT 1.71%) is a major competitor to DexCom in the CGM market. Although Abbott's FreeStyle Libre and Dexcom's G-series sensors are direct rivals, the extensive and growing addressable market that the companies operate in allows room for multiple successful players. Abbott also has several other notable product lines outside its CGM systems.
Abbott operates four primary business segments: established pharmaceuticals, diagnostic products, nutritional products, and medical devices. The nutrition segment includes a broad range of pediatric and adult nutritional products. Abbott is a global leader in in-vitro diagnostics, with its systems and tests used worldwide in labs, hospitals, and at the point of care to screen for, diagnose, and monitor diseases.
Beyond diabetes care with its CGM systems, Abbott's medical device segment holds leadership positions in several other disease areas including cardiovascular products like pacemakers and defibrillators. The pharmaceuticals segment focuses on high-quality, branded generic pharmaceuticals across therapeutics areas including gastroenterology and women's health.
NYSE: ABT
Key Data Points
In the third quarter, Abbott reported strong results, with worldwide sales increasing 6.9% year over year to $11.37 billion. The medical devices segment was a significant growth driver in Q3 and achieved 12.5% organic sales growth in the three-month time frame.
Meanwhile, Q3 2025 adjusted earnings per share (EPS) totaled $1.30, a 7.4% year-over-year improvement, and Abbott's adjusted operating margin expanded by 40 basis points in the quarter despite some tariff impacts. Full-year 2025 organic sales growth is projected to be between 7.5% to 8%.
The company's presence in North America and Europe as well as high-growth emerging economies where healthcare access and infrastructure are expanding remain key long-term growth drivers for both its businesses. As icing on the cake, Abbott is a Dividend King and has increased its dividend for 53 consecutive years. (A Dividend King is a company that has raised its annual dividend for at least 50 years.)
The yield is about 1.8%. This dividend track record can provide a steady income stream for investors and demonstrates the company's financial health and stability in a wide range of market environments. For new investors putting cash into healthcare stocks, Abbott Labs is another worthy contender to think about starting a position in.
