Are pharmaceutical stocks a good investment?

Since many pharmaceutical companies pay attractive dividends, these types of stocks are well suited for income-focused investors. However, the significant cost and long elapsed time between drug discovery and approval make investing in pharmaceutical stocks relatively risky.

What are the top pharmaceutical companies?

Top pharmaceutical companies based on market cap include Eli Lilly, Johnson & Johnson, AbbVie, Novo Nordisk (NYSE:NVO), Novartis (NYSE:NVS), AstraZeneca (NASDAQ:AZN), Merck (NYSE:MRK), and Pfizer.

Which pharma stock gives the highest dividend?

Pfizer offered the highest forward dividend yield among big pharma stocks in early 2026.

Which pharma stock is best for the long term?

It's difficult to know for sure which pharma stock is best for the long term. However, several pharma stocks continue to survive and thrive after more than 100 years in business, including Johnson & Johnson and Pfizer.

What are the best medical stocks to invest in?

Medical stocks span a broad range, including biotech stocks, pharma stocks, medical device stocks, and more. There are many great medical stocks for investors. A few that especially stand out include AbbVie, Intuitive Surgical (NASDAQ:ISRG), and Vertex Pharmaceuticals (NASDAQ:VRTX).

Are biotech stocks a good investment?

Biotech stocks can offer exceptional long-term growth prospects. However, they can also be highly volatile. Biotech stocks probably won't be a good fit for risk-averse investors. Some biotech stocks, though, could be attractive to aggressive growth investors. Investors could also consider investing in biotech exchange-traded funds (ETFs).

Best Pharmaceutical Stocks for 2026 and How to Invest in Them

Best Pharmaceutical Stocks to Buy in 2026 and How to Invest in Them

By Keith Speights – Updated Feb 14, 2026 at 1:09 PM EST | Fact-checked by Frank Bass

Key Points

The pharmaceutical market, worth $1.7 trillion, offers stable long-term investment opportunities.
Top pharma stocks like AbbVie and Pfizer are poised for growth despite patent challenges.
Invest in pharmaceutical stocks by considering dividend yield and market stability.

The global pharmaceutical market totals roughly $1.7 trillion and continues to grow. This huge sector improves the quality of life for many people while creating attractive opportunities for long-term investors. Before you invest in pharmaceutical companies, learn about some top picks and how to choose the best stocks in the pharmaceutical sector.

Loading paragraph...

Pills in the form of a dollar sign. — Image source: Getty Images.

Loading image...

Loading paragraph...

Ticker Information Table
Name and ticker	Current price	Market cap	Dividend yield
AbbVie (NYSE:ABBV)	$231.77	$410.4 billion	2.87%
Eli Lilly (NYSE:LLY)	$1,050.20	$992.4 billion	0.59%
Johnson & Johnson (NYSE:JNJ)	$248.88	$598.7 billion	2.09%
Pfizer (NYSE:PFE)	$27.65	$157.2 billion	6.22%

Data as of Feb 28, 2026. Showing 4 of 4 tickers.

Loading ticker_table...

Loading paragraph...

NYSE: ABBV

AbbVie

Today's Change

(3.15%) $7.08

Current Price

$231.77

Key Data Points

Market Cap

$410B

Day's Range

$225.46 - $231.95

52wk Range

$164.39 - $244.81

Volume

244K

Avg Vol

6.4M

Gross Margin

70.12%

Dividend Yield

2.87%

Loading company_card...

Loading paragraph...

NYSE: LLY

Eli Lilly

Today's Change

(2.76%) $28.18

Current Price

$1050.20

Key Data Points

Market Cap

$992B

Day's Range

$1015.39 - $1052.00

52wk Range

$623.78 - $1133.95

Volume

177K

Avg Vol

3.2M

Gross Margin

83.04%

Dividend Yield

0.59%

Loading company_card...

Loading paragraph...

NYSE: JNJ

Johnson & Johnson

Today's Change

(2.22%) $5.41

Current Price

$248.88

Key Data Points

Market Cap

$599B

Day's Range

$243.40 - $248.93

52wk Range

$141.50 - $248.94

Volume

320K

Avg Vol

8.9M

Gross Margin

67.97%

Dividend Yield

2.09%

Loading company_card...

The company's pipeline features almost 40 programs in late-stage clinical testing. These clinical trials are testing new drug candidates and seeking additional approvals for drugs such as Tremfya.

Johnson & Johnson spun off its consumer health unit into a stand-alone entity in 2023. This left the company with its two fastest-growing segments: pharmaceutical and medical devices.

Like AbbVie, J&J is a Dividend King, having raised its annual dividend for 63 consecutive years. The company is also highly resilient, surviving and thriving since it began operations in 1886.

Loading paragraph...

NYSE: PFE

Pfizer

Today's Change

(2.03%) $0.55

Current Price

$27.65

Key Data Points

Market Cap

$157B

Day's Range

$27.09 - $27.67

52wk Range

$20.91 - $27.94

Volume

42M

Avg Vol

48M

Gross Margin

76.10%

Dividend Yield

6.22%

Loading company_card...

Loading paragraph...

Pharmaceutical stocks FAQ

Loading faq...

About the Author

Keith Speights is a contributing Motley Fool healthcare analyst covering publicly traded companies across pharmaceuticals, biotechnology, medical devices, technology, and marijuana. Prior to The Motley Fool, Keith was CEO of Constant Care Technology, a healthcare technology company; vice president of American HealthTech, a healthcare software company; and a director of operations for Blue Cross Blue Shield of Mississippi, a health insurer. He holds a B.S. in Industrial Engineering from Mississippi State University.

TMFFishBiz

Keith Speights has positions in AbbVie, Bristol Myers Squibb, and Pfizer. The Motley Fool has positions in and recommends AbbVie, Bristol Myers Squibb, and Pfizer. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

How to invest in pharmaceutical companies

The basics of investing in pharmaceutical companies are no different than investing in any stock. Follow these steps to invest in pharma stocks:

Open your brokerage app: Log in to your brokerage account where you handle your investments.

Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.

Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.

Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.

Submit your order: Confirm the details and submit your buy order.

Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Choosing the best pharmaceutical stocks

Knowing what to look for can help you identify the best pharmaceutical stocks. The top pharma companies have a few key characteristics in common, including:

They usually increase their revenue and earnings consistently.

They have robust pipelines that allow them to offset any revenue declines resulting from patent expirations.

They are adept at developing new therapies and using existing drugs for new purposes.

They make smart business development deals that bolster their internal research and development.

Risks of owning pharmaceutical stocks

The significant cost and long elapsed time between drug discovery and approval (assuming the drug development process succeeds and regulatory approval is granted) make investing in pharmaceutical stocks relatively risky. Consider these risk factors before investing in any pharmaceutical companies:

Potential for clinical failure: Early-stage drug candidates are especially likely to fail, meaning they are proven to be unsafe or ineffective in clinical trials. Even drug candidates in phase 3 testing can ultimately fail.

Potential failure to win regulatory approval: Even drug candidates that successfully complete clinical testing may fail to win approval from the relevant regulatory agencies.

Non-reimbursement risks: To achieve commercial success for approved drugs, pharma companies must convince institutional payers, such as public and private health insurers, to reimburse patients for the costs of their drugs. Pharmaceutical companies must also contend with pressure from these payers to set drug prices lower than their targets.

Product liability and litigation potential: The medical risks associated with pharmaceutical drugs expose drugmakers to liability issues. Companies can be forced to recall drugs from the market due to safety concerns, and lawsuits against pharma companies are common.

As in any industry, pharmaceutical companies face competition from other drugmakers. But competition in this sector can be especially fierce because when patents expire, generic drugmakers are able to produce the same drugs much more cheaply.

Should you invest in pharmaceutical companies?

There are several reasons to consider investing in pharmaceutical companies, including:

Many pharmaceutical companies pay attractive dividends, so their stocks are well suited for income-focused investors.

Pharmacy stocks can be safe havens during periods of market volatility.

Some therapeutic areas, such as obesity, have especially strong growth prospects.

Artificial intelligence (AI) is enabling pharmaceutical companies to develop new drugs more quickly and cost-effectively, thereby accelerating revenue and earnings growth.

With the baby boomer generation growing older, many more people in the coming years are likely to need prescription medications.

Pharma stock trends

Below are key trends affecting pharmaceutical stocks over the coming years:

Negotiated prices with Medicare for high-cost drugs

Evolution of the GLP-1 obesity drug market to oral therapies

A transition to manufacturing more drugs in the U.S. due to high tariffs

Increased adoption of personalized medicines based on a patient's genetics, environment, and lifestyle

Use of AI in drug discovery and development

Aging demographic trends in the U.S. and other countries

Best Pharmaceutical Stocks to Buy in 2026 and How to Invest in Them

Key Points

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Related investing topics

Best Biotech Stocks to Buy in 2026 and How to Invest in Them

Best Cannabis Stocks to Buy in 2026 and How to Invest in Them

Best Healthcare Stocks to Buy in 2026 and How to Invest in Them

Biotech vs. Pharma: What's the Difference?

Pharmaceutical stocks FAQ

About the Author

Stocks Mentioned

Our Guides

Premium Investing Services

Best Biotech Stocks to Buy in 2026 and How to Invest in Them

Best Cannabis Stocks to Buy in 2026 and How to Invest in Them

Best Healthcare Stocks to Buy in 2026 and How to Invest in Them

Biotech vs. Pharma: What's the Difference?

Key Data Points

Pharmaceutical stocks FAQ

Are pharmaceutical stocks a good investment?

What are the top pharmaceutical companies?

Which pharma stock gives the highest dividend?

Which pharma stock is best for the long term?

What are the best medical stocks to invest in?

Are biotech stocks a good investment?

How to invest in pharmaceutical companies

Choosing the best pharmaceutical stocks

Risks of owning pharmaceutical stocks

Should you invest in pharmaceutical companies?

Pharma stock trends

Related investing topics

FAQ

Top pharmaceutical stocks to consider

Key Data Points

Key Data Points

Key Data Points

1. AbbVie

2. Eli Lilly

3. Johnson & Johnson

4. Pfizer