Healthcare stocks are not known for healthy dividends. Great for growth, yes, but often so-so for dividend yields. The average medical large-cap stock's dividend yield was 1.67% at the end of 2025, sixth among the 11 sectors for large-cap stocks.
Unlike utilities, which can rely on steady, fixed revenue sources, healthcare companies must continually invest in research and development (R&D). That's because sales for blockbuster drugs made by pharmaceutical companies decline when their patents expire and they face generic competition. Research and development is also important for medical equipment stocks, so often the priority is on funding new products rather than returning dividends to shareholders.
However, there are healthcare stocks that have consistently grown their dividend, and whose yields are above-average, and these companies have the free cash flow needed to keep growing their dividends. AbbVie (ABBV 0.41%) and Medtronic (MDT 1.00%) are two such stocks.
AbbVie: Dividend giant among large-cap pharmaceutical companies
AbbVie has a dividend yield of 2.98%. The company has been around only since it was spun off from Abbott Laboratories (ABT 1.03%) in 2013, but including its time as a part of Abbott, it has increased its quarterly dividend for 54 consecutive years. That makes it a Dividend King, one of only 56 companies that have increased their dividends for 50 or more years. AbbVie has already raised its dividend by 5.5% this year to $1.73 per share.
NYSE: ABBV
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In the third quarter, the pharma giant reported revenue of $15.8 billion, up 9% year over year. Earnings per share (EPS) were $1.86, a 38% decline from the same quarter in 2024, driven by increased spending on in-process research and development and milestone expenses.
The company has successfully transitioned from replacing Humira, once the world's top-selling drug, to a wider portfolio that includes two other immunology blockbuster therapies, Rinvoq and Skyrizi. A decade ago, Humira brought in 63% of the company's revenue. In the most recent quarter, Skyrizi was the company's top-selling drug with $4.7 billion in the quarter, with Rinvoq bringing in $2.2 billion in sales and Humira bringing in $993 million.
As for its increased spending, it will likely pay off down the line. AbbVie has already improved its oncology portfolio significantly by adding solid tumor therapies Elahere (for ovarian cancer), Emrelis (for lung cancer), and Epkinly (for lymphoma) to its two blockbuster blood cancer drugs, Imbruvica and Venclexta. The oncology segment, as of the third quarter, accounts for nearly 11% of AbbVie's revenue.
The company's dividend payout ratio of 58% is a tad high, but given its free cash flow per share of $11.11 over the past 12 months, its annual dividend payout of $6.92 is easily sustainable.
Medtronic: Diversified medical equipment maker sees steady growth
Medtronic, with a market cap of $132 billion, is the largest stand-alone medical device maker. The company invented a battery-operated, wearable pacemaker and it makes everything from defibrillators to heart valves to insulin pumps and various surgical tools.
NYSE: MDT
Key Data Points
In the past few years, however, it has branched beyond hardware and into smart devices, such as its GI Genius, an AI-powered system that helps doctors find the smallest of polyps during colonoscopies; and the PillCam, a camera inside a pill that allows doctors to view inside your digestive tract.
The company has posted impressive revenue gains in recent years, particularly in its atrial fibrillation treatment and ambulatory surgery centers. In the second quarter of fiscal 2026, revenue was reported as $9 billion, up 6.6% year over year. EPS jumped 8% over the same period last year, to $1.07. In 2026, it is predicting revenue to rise by 5.5% and non-GAAP (adjusted) EPS to increase by 4.5%.
Its 1.4% dividend raise last year was the 48th consecutive year it has increased its dividend and its dividend yield is around 2.75%. Its payout ratio is 69%, but with increased revenue predicted, that doesn't seem to be a big concern. It plans to spin off its diabetes business, its smallest and least profitable division, which accounts for only 8% of revenue. It has said it doesn't see the change impacting its dividend and being positive toward its bottom line.
Two healthcare stocks that act like utilities
AbbVie and Medtronic share the advantage of size, which allows them to continue growing their revenue and, consequently, their dividends. That size and their built-in diversification mean that if one of their segments stumbles, another will likely step up.
AbbVie's huge cash-flow generation, more than $19 million last year, allows it to spend heavily on R&D and still put out a consistently growing dividend. Medtronic is a dominant player in medical equipment, which, like AbbVie, is using its profits to develop new products with an eye toward the future.
Of the two, I prefer AbbVie because of its track record of innovation and sizable cash position. While it was enjoying profits from Humira, it made sure to spend on its pipeline and it has 90 programs in it, including 60 mid- or late-stage candidates.
