2 Healthcare Dividend Stocks That are Just What the Doctor Ordered

Core Viewpoint - AbbVie and Medtronic are highlighted as healthcare stocks that consistently grow their dividends, supported by healthy free cash flow, despite the general trend of lower dividend yields in the healthcare sector [1][3][15]. AbbVie - AbbVie has a dividend yield of 2.98% and has increased its quarterly dividend for 54 consecutive years, qualifying it as a Dividend King [4]. - The company reported revenue of $15.8 billion in the third quarter, a 9% year-over-year increase, although earnings per share (EPS) declined by 38% to $1.86 due to higher R&D spending [6]. - AbbVie has successfully transitioned from reliance on Humira, which previously accounted for 63% of its revenue, to a diversified portfolio including Rinvoq and Skyrizi, with Skyrizi generating $4.7 billion in the latest quarter [7]. - The oncology segment now contributes nearly 11% to AbbVie's revenue, bolstered by new therapies [8]. - AbbVie's dividend payout ratio is 58%, but its free cash flow per share of $11.11 supports its annual dividend payout of $6.92 [9]. Medtronic - Medtronic, with a market cap of $132 billion, is the largest stand-alone medical device maker, producing a wide range of medical equipment [10]. - The company reported revenue of $9 billion in the second quarter of fiscal 2026, a 6.6% year-over-year increase, with EPS rising 8% to $1.07 [13]. - Medtronic's dividend yield is approximately 2.76%, and it has increased its dividend for 48 consecutive years, with a payout ratio of 69% [14]. - The company plans to spin off its diabetes business, which accounts for only 8% of revenue, without impacting its dividend [14]. Industry Insights - Healthcare companies, unlike utilities, must continuously invest in R&D due to the nature of their products, which often face patent expirations and generic competition [2]. - AbbVie and Medtronic leverage their size and diversification to maintain revenue growth and dividend increases, mitigating risks from potential downturns in specific segments [15][16].