2 Strong Healthcare Stock Picks for Dividend Investors

Core Insights - The healthcare sector is considered recession-resistant due to the inelastic demand for medical services, making it a stable investment during economic fluctuations [1] - Established healthcare companies, particularly in pharmaceuticals and medical devices, have strong profits and cash flows that support consistent dividend payments and growth [2] Company Analysis: AbbVie - AbbVie has a 53-year history of increasing dividends, recently announcing a 5.5% increase, with a current yield of approximately 3.3% [3] - The company is experiencing significant growth from its immunology drugs Skyrizi and Rinvoq, which saw sales growth of 47% and 35% respectively in Q3 2025, contributing to projected combined sales exceeding $25 billion for the year [4] - AbbVie's neuroscience portfolio is also growing, with over 20% sales growth driven by drugs like Ubrelvy and Vraylar, leading to total net revenue of nearly $15.8 billion in Q3, a 9% year-over-year increase [5] - Despite a 38% year-over-year decline in diluted earnings due to increased R&D charges, AbbVie's adjusted EPS of $1.86 surpassed Wall Street expectations [6][8] - The company has been actively acquiring firms to diversify its portfolio, including a recent $2.1 billion acquisition of Capstan Therapeutics, enhancing its immunology pipeline [7] Company Analysis: Johnson & Johnson - Johnson & Johnson has increased its dividend for 63 consecutive years, reflecting a strong commitment to shareholder returns [10] - The company generated approximately $20 billion in free cash flow in 2024, with a manageable dividend payout ratio of around 50%, allowing for future increases [11] - Johnson & Johnson holds a rare AAA credit rating, indicating exceptional financial strength [12] - The company is focusing on six priority growth areas: oncology, immunology, neuroscience, cardiovascular, surgery, and vision products, with Q3 2025 sales reaching about $24 billion, a 6.8% increase year-over-year [14] - Key growth products include Darzalex, Tremfya, and Carvykti, with the oncology segment showing nearly 20% operational sales growth [15][16]