Last year will go down as the year pharmaceutical companies realized that drugs are where it's at.
With that kind of performance, it shouldn't come as much of a surprise that Pfizer
Of course, I'd be remiss if I didn't mention Eli Lilly, which doesn't need to sell off anything because it never diversified away from its core in the first place.
These moves are great because they allow investors to pick and choose which segments they're most interested in. Right now if you want to own Pfizer's drug pipeline, but don't want the animal-health division, you don't really have a choice. In the near future, however, investors won't have that problem.
And if you want to diversify into multiple areas, you can create your own conglomerate by picking the best drug company, the best nutrition company, and the best medical device company for your portfolio.
Let's just hope Pfizer chooses to spin out its segments to give investors more options.
The flip side
But what about Johnson & Johnson
The size also offers diversification. Johnson & Johnson's consumer health division is having a horrible time of late, but it hasn't affected the bottom line much because the company has so many other products to fall back on.
The company is more stable and therefore less risky, but that diversification comes at a cost: Growth areas like high-margin drugs get hindered by the slower-moving segments.
If you want a set-it-and-forget-it stock pick in the health-care industry, Johnson & Johnson is your best bet. But I think investors could do better picking and choosing the best options from a larger assortment of companies.
While you wait for Pfizer and Abbott to finish their breakups, take a look at Fool's new free report: "Secure Your Future With 11 Rock-Solid Dividend Stocks." The analysts picked one of the stocks mentioned in this article. Just click here to get your free copy and find out which one.Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Abbott Laboratories and Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Abbott Laboratories, Johnson & Johnson, and Pfizer. Motley Fool newsletter services have also recommended creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
3 Dividend Stocks That Pay You More Than ExxonMobil Does
The oil giant pays its shareholders well, but there are opportunities out there for even higher payouts.
The 1 Word That Explains Why Pfizer's Future Looks Brighter Than Its Past
The big drugmaker had a clear message at the J.P. Morgan Healthcare Conference -- and it's a good one for investors.
3 Scorching-Hot Healthcare Stocks -- Are They Buys?
These three companies gained at least 400% in 2017. Can the good times continue?