Healthcare is one of the most lucrative industries where investors can find world-class businesses to buy and hold. Industry leaders can be unstoppable long-term wealth creators, though there's no such thing as a perfect stock. Novo Nordisk (NVO 2.05%) and Zoetis (ZTS 3.62%) have taken their share of lumps recently.
Still, each company pays its shareholders a growing dividend, and both have very bright futures thanks to advantageous positions in long-term growth trends, like obesity drugs and animal care.
Perhaps the best part is that you can own a share of each for under $200, making them suitable for almost any investment budget. Here is why you may want to jump on them now.
Image source: Novo Nordisk.
Novo Nordisk: The Wegovy pill resurgence
Novo Nordisk has tumbled amid pricing pressure from competitors Eli Lilly and compounding pharmacies, as well as pressure from the U.S. government to cut drug prices. That said, Novo Nordisk recently launched its Wegovy pill, the first oral GLP-1 agonist for weight loss approved for sale in the United States. Novo Nordisk has sold over 170,000 scripts in its first month, and many of those patients are new to GLP-1s, so the company is gaining new patients.
NYSE: NVO
Key Data Points
Management warned that sales could drop by as much as 13% this year due to lower prices caused by competition and pricing programs. Novo Nordisk's revenue is still up by 77% over the past three years, so this isn't a complete disaster. The Danish company pays a semi-annual dividend and has raised it as profits have grown. If the Wegovy pill can build on its strong launch, the stock, trading at less than 15 times this year's earnings estimates, could deliver a one-two punch of dividend income and capital gains.
Zoetis: This leading animal health giant is on sale
Zoetis is a leading provider of medications and other treatment products for companion animals and livestock. The company has paid and raised its dividend for the past 12 years, and should have plenty of opportunities to continue growing it. The world's population will need more livestock as it expands. Meanwhile, millennials and Gen Z spend more money on their pets than previous generations. Those tailwinds have analysts expecting nearly 10% annualized growth over the next three to five years.
NYSE: ZTS
Key Data Points
The stock has outperformed the market throughout the past decade, up until recently. Adverse effects from the company's canine osteoarthritis drug, Librela, have given Zoetis enough bad publicity to affect business performance. Shares trade at just over 21 times earnings today, the stock's lowest P/E ratio in recent history by a wide margin. Zoetis has a diverse product portfolio, so one misfire shouldn't sink the ship over the long term. Investors who buy and wait out the noise may see Zoetis return to its unstoppable wealth-building ways in due time.
