While few investors have successfully timed the markets, buy-and-hold strategies tend to yield favorable results over the long term. The key is to select well-run companies that make highly desirable products. The healthcare sector is filled with good options, but there's a catch: Today's industry leaders may not be the best choice.
Here's why Intuitive Surgical (ISRG 0.13%) highlights the attractiveness of Medtronic (MDT +0.29%), why Eli Lilly (LLY 2.61%) showcases the potential for Pfizer (PFE +0.12%) -- and why, for conservative investors, medical device and pharmaceutical giant Johnson & Johnson (JNJ 0.31%) could be a great long-term investment.
Image source: Getty Images.
Surgical robotics is in demand
In the third quarter of 2025, Intuitive Surgical expanded its installed base of surgical robots by 13%, while the number of surgeries performed with those robots increased by 20%. With roughly 75% of the company's revenue coming from what amounts to parts and services for its robots, this is an annuity-like medical device business and a huge growth opportunity. Too bad the stock's price-to-earnings (P/E) ratio is a lofty 74.
NYSE: MDT
Key Data Points
Competitor Medtronic's P/E is much less than half that at 28. Granted, surgical robots are a fairly new product for Medtronic, so it has a lot of catching up to do. And these robots are just one of many types of products that the diversified medical device company sells. However, the flywheel that's powering Intuitive Surgical is being replicated at Medtronic. That could help power the company's growth while it tries to streamline its business by focusing on its most profitable products.
Medtronic has a proven track record of success, with 48 consecutive annual dividend increases serving as proof. Sure, you can buy the high-priced surgical robotics leader. If you think long-term, however, Medtronic's up-and-coming surgical robot could be the better choice. And you'll collect a handsome 2.7% dividend yield along the way, versus no dividend at all from Intuitive Surgical.
One weight loss success hints at another opportunity
Eli Lilly's GLP-1 drugs Mounjaro (for diabetes) and Zepbound (for weight loss) have turned into a gold mine for the pharmaceutical giant, providing more than 50% of the company's sales in the third quarter of 2025. Investors reacted to the company's success by driving the stock sharply higher. Its P/E ratio is a lofty 53. A lot needs to go right in the future for Eli Lilly to continue rising.
However, Pfizer's P/E of 15 or so suggests that investors have very low expectations. To be fair, there are valid reasons for investors to be concerned about Pfizer at present. It has a patent cliff approaching shortly as a few of its blockbuster drugs lose their patent protections, and its pipeline is a bit weak. For dividend investors, the huge 6.8% yield comes with a dividend payout ratio of over 100%.
NYSE: PFE
Key Data Points
But Pfizer isn't sitting around and hoping for the best; it's taking a page from the successful playbook that all drugmakers use. It acquired a competitor, Metsera, with an attractive drug pipeline, notably in the weight loss space. In fact, Pfizer wound up in a bidding war for Metsera and, in the end, won out, which is a testament to what it can achieve. While it's currently out of favor, long-term investors should give this industry survivor a closer look. Eli Lilly won't always be the industry's leader, and Pfizer could easily be next in line for the throne.
Play it safe with this Dividend King
Medtronic and Pfizer are both value plays that will likely work out well if you think in decades. But what if you can't stomach the uncertainty involved with buying out-of-favor stocks? Johnson & Johnson could be the solution.
J&J, as it's often known, operates in both the pharma and device spaces. It is a leader in both and has material opportunities in both.
NYSE: JNJ
Key Data Points
The big story, however, is the consistency with which J&J has performed over the long term. That's highlighted by its status as a Dividend King, with over five decades' worth of annual dividend increases behind it. Right now, it offers a 2.5% dividend yield, which is more than twice the yield of the S&P 500 index.
Its P/E is a relatively modest 20. That's higher than Pfizer's, but way less than Intuitive Surgical's, Medtronic's, and Eli Lilly's. J&J's diversification suggests that it won't provide as much upside as either Medtronic or Pfizer, but it also hints at a smoother ride for investors who hold for the long term.
The hottest stocks aren't always the best options
Intuitive Surgical and Eli Lilly are in the investing spotlight right now, and for good reason. But they won't always be, which is why paying premium prices for those stocks might not be your best long-term option.
If you want to buy and hold, you might find that Medtronic and Pfizer are preferable options in the medical device and pharmaceutical niches, respectively. If you want broader exposure, Johnson & Johnson is a big player in both -- and has long been a reliable dividend stock.
