In this article, we will take a look at some of the best dividend stocks from the healthcare sector.
The US healthcare sector has been at the forefront since the emergence of COVID-19 in 2020, leading to a significant transformation in the industry. The rise of telehealth, virtual consultations, and technological advancements has reshaped the way healthcare services are delivered.
Over the past two decades, the healthcare sector has expanded considerably in relation to the broader economy, as reflected in its growing share of gross domestic product (GDP). According to a report by CNBC, in 2003, healthcare spending made up 15.7% of US GDP, increasing by approximately 1.7 percentage points over the next decade to reach 17.4% in 2013. Today, it is estimated at around 18.4% of GDP, and projections from the Centers for Medicare & Medicaid Services suggest it could rise to 20% by 2030. This steady increase is driven by several factors, including rising demand for healthcare services, advancements in medical technology, and escalating costs. The aging population, particularly as baby boomers retire, has significantly increased the need for medical care, while longer life expectancies have resulted in prolonged healthcare utilization. In addition, the prevalence of chronic conditions such as diabetes, cardiovascular diseases, and obesity has contributed to rising costs. The latest breakthroughs in diagnostics, treatments, and pharmaceuticals—though beneficial—often come with higher expenses, further fueling the sector’s expansion.
The healthcare industry’s share of the overall economy has expanded, with healthcare companies experiencing faster revenue growth than the broader market in the past five years. During this period, healthcare sector revenues have increased by nearly 61%, compared to just over 38% growth for the broader market as a whole, as reported by CNBC. However, despite this strong revenue performance, the healthcare sector has lagged behind the broader market index, which has been driven by the rapid expansion of the technology sector.
The healthcare sector faced a turbulent year in 2024. During the first half, investors gravitated toward industries such as technology and communication services, particularly those linked to the growing influence of AI, leaving healthcare stocks trailing behind. However, as the market rally broadened in the second half of the year, healthcare stocks saw some recovery, though certain segments continued to struggle with lingering supply-and-demand imbalances from the pandemic. Beyond these challenges, fundamental issues and policy uncertainties created additional obstacles for parts of the sector. While some regulatory pressures may ease with the incoming administration, others—such as drug pricing concerns—are expected to remain a persistent issue.
On a positive note, innovation remained robust throughout the year. Biotech companies delivered a series of encouraging clinical updates while growing enthusiasm for new treatments targeting obesity and diabetes contributed to an increase in pharmaceutical firms’ market valuations. A Fidelity report suggested that the healthcare sector is well-positioned for growth in 2025. The industry benefits from strengthening business fundamentals, such as rising cash flows, and encompasses a diverse range of segments that offer a blend of defensive stability and growth potential, making it appealing across different market conditions.
The healthcare sector is also attracting attention due to its rising dividend payouts. In the third quarter of 2024, total dividends distributed by the global healthcare industry reached $25.7 billion, up from $18.7 billion in Q3 2018, reflecting steady growth in shareholder returns, according to a report by Janus Henderson. Given this, we will take a look at some of the best dividend stocks in the healthcare sector.
Our Methodology
For this list, we scanned Insider Monkey’s database of Q4 2024 and picked healthcare dividend companies. From that list, we chose healthcare stocks with a strong track record of paying dividends to shareholders, which makes them resilient in the current environment. The stocks are ranked in ascending order of the hedge fund investors owning stakes in them, according to Insider Monkey’s database of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
13. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 72
Amgen Inc. (NASDAQ:AMGN) is an American multinational biopharmaceutical company, headquartered in California. The company’s portfolio includes notable treatments such as Tezspire, designed for asthma, and Tepezza, a medication for thyroid eye disease (TED). Tezspire is still undergoing multiple clinical trials, with the potential for expanded indications. Meanwhile, Tepezza remains the only FDA-approved treatment for TED in the US, and Amgen has been working to introduce it in additional markets.
These two drugs represent just a portion of Amgen Inc. (NASDAQ:AMGN)’s extensive lineup of approved therapies, which positions the company for continued revenue and earnings growth in the coming years. In the fourth quarter of 2024, the company reported $9.1 billion in revenue, marking an 11% increase from the prior year period and surpassing analysts’ expectations by $216.5 million. Product sales also climbed 11%, primarily driven by a 14% increase in volume. Excluding contributions from the Horizon Therapeutics acquisition, sales grew by 10%, with volume expanding by 15%.
Amgen Inc. (NASDAQ:AMGN) is also popular among investors because of its strong dividend policy. The company offers a quarterly dividend of $2.38 per share and has a dividend yield of 3.03%, as of March 20. It maintained a steady cash position in the latest quarter. The company generated $4.4 billion in free cash flow, a significant increase from $300 million in the same period the previous year. Operating cash flow also saw a sharp rise, reaching $4.8 billion compared to $500 million in the fourth quarter of 2023. In addition, Amgen distributed $1.2 billion to shareholders in the form of dividends during the quarter. AMGN is one of the best dividend stocks on our list as the company has raised its payouts for 13 consecutive years.
12. Elevance Health, Inc. (NYSE:ELV)
Number of Hedge Fund Holders: 73
Elevance Health, Inc. (NYSE:ELV) is an American health insurance company that offers a wide range of related services to its consumers. Formerly known as Anthem, the company manages Blue Cross and Blue Shield plans across 14 states while holding a license to offer health insurance nationwide. In addition to its insurance operations, Elevance Health runs CarelonRx, a pharmacy benefits manager, and Carelon Services, which provides a range of healthcare solutions, including behavioral health, wellness programs, integrated care delivery, palliative care, and utilization management.
Elevance Health, Inc. (NYSE:ELV)’s health benefits division—which includes individual and employer group plans, BlueCard, Medicare, Medicaid, and federal health programs—accounts for approximately 88% of its total revenue. However, its fastest-growing segment is Carelon Services. Since the start of 2025, the stock has surged by nearly 18.5%.
In the fourth quarter of 2024, Elevance Health, Inc. (NYSE:ELV) reported revenue of $45 billion, which showed a 6% growth from the same period last year. This revenue growth was primarily fueled by higher premium rates in the Health Benefits segment, contributions from acquisitions completed in 2024, and an increase in CarelonRx product sales. However, these gains were partially offset by a decline in Medicaid membership. The revenue also beat analysts’ estimates by $271.8 million.
Elevance Health, Inc. (NYSE:ELV)’s cash position also came in strong. The company generated an operating cash flow of $5.8 billion in 2024. Its cash and investments came in at $2.4 billion. Due to this cash generation, the company was able to distribute dividends worth $373 million in Q4. On January 23, it declared a 4.9% hike in its quarterly dividend to $1.71 per share. Through this increase, the company stretched its dividend growth streak to 13 years, which makes ELV one of the best dividend stocks on our list. As of March 20, the stock has a dividend yield of 1.59%.
11. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 74
CVS Health Corporation (NYSE:CVS) is an American healthcare company that offers advanced health care from pharmacy services and health plans to health and wellness. The stock is outperforming the broader market with a wide margin, surging by over 54% since the start of 2025, whereas the market has entered into negative territory. The news may have been a welcome surprise, given the company’s struggles last year, when it consistently fell short of expectations. These challenges ultimately resulted in a leadership change, with David Joyner replacing Karen Lynch as CEO. This past quarter marked his first full period in charge. With new leadership in place, investor sentiment may be improving, potentially leading to more stable quarterly results.
In the fourth quarter of 2024, CVS Health Corporation (NYSE:CVS) reported $97.7 billion in revenues, up 4.2% from the same period last year. GAAP diluted EPS dropped to $1.30 from $1.58 in the previous year, while adjusted EPS declined to $1.19 from $2.12. The decrease was largely driven by weaker performance in the Health Care Benefits segment, which was impacted by ongoing utilization pressure and the negative effects of the company’s Medicare Advantage star ratings for the 2024 payment year.
CVS Health Corporation (NYSE:CVS) is one of the best dividend stocks on our list with a solid cash position. The company ended the year with nearly $8.6 billion in cash and cash equivalents. Its operating cash flow for FY24 came in at over $9.1 billion. The company has been making regular dividends to shareholders since 1997. Currently, it offers a quarterly dividend of $0.665 per share and has a dividend yield of 3.90%, as of March 20.
10. McKesson Corporation (NYSE:MCK)
Number of Hedge Fund Holders: 78
McKesson Corporation (NYSE:MCK) is a Texas-based company that specializes in pharmaceutical distribution and offers health information technology, medical supplies, and health management solutions. In recent years, the company has prioritized strengthening its core operations in the US and Canada, scaling back its presence in certain European markets to better allocate resources. Its strong distribution network, along with strategic partnerships with customers and suppliers, enhances efficiency and expands its reach in the pharmaceutical distribution sector.
In the third quarter of fiscal 2025, McKesson Corporation (NYSE:MCK) reported an 18% revenue increase to $95.3 billion, while adjusted operating profit rose 16% to $1.5 billion. However, revenue came in slightly below Wall Street’s forecast of $96.08 billion, partly due to weaker-than-expected sales in its US pharmaceutical segment. On the back of its solid performance, the company raised its full-year adjusted EPS outlook to a range of $32.55 to $32.95, reflecting an annual growth of 19% to 20%.
McKesson Corporation (NYSE:MCK) has always remained committed to its shareholder obligation. In the first nine months of 2024, the company returned $3.1 billion to shareholders, including $254 million in dividends. The company offers a quarterly dividend of $0.71 per share and has a dividend yield of 0.43%, as of March 20. In 2024, the company achieved its eighth consecutive annual dividend hike, which makes MCK one of the best dividend stocks in the healthcare sector.
9. HCA Healthcare, Inc. (NYSE:HCA)
Number of Hedge Fund Holders: 81
HCA Healthcare, Inc. (NYSE:HCA) is a Tennessee-based operator of healthcare facilities. The company runs a network of hospitals and outpatient centers, having built a long-standing presence in the healthcare industry. Over the years, it has expanded its services across the United States and established a significant footprint in England. Its competitive strengths stem from a well-diversified revenue base, strong market position, and strategic growth initiatives. To drive success, the company has emphasized the importance of key areas such as regulatory compliance and effective labor management. The stock has surged by over 12% since the start of 2025.
In the fourth quarter of 2024, HCA Healthcare, Inc. (NYSE:HCA) posted revenue of $18.285 billion, slightly exceeding analysts’ expectations of $18.234 billion. However, diluted earnings per share (EPS) came in at $5.63, falling short of the projected $6.13. The quarter presented difficulties, as revenue was affected by losses stemming from Hurricanes Helene and Milton. Despite these setbacks, the company maintained strong operational growth, though labor cost pressures and natural disasters had an impact on its performance.
HCA Healthcare, Inc. (NYSE:HCA) reported a solid cash position with an operating cash flow of $2.559 billion in Q4. The company ended the quarter with nearly $2 billion available in cash and cash equivalents. On January 24, it announced a 9.1% hike in its quarterly dividend to $0.72 per share. The stock has a dividend yield of 0.86%, as of March 20.
8. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 85
AbbVie Inc. (NYSE:ABBV) ranks eighth on our list of the best dividend stocks from the healthcare sector. The American multinational pharmaceutical company offers a quarterly dividend of $1.64 per share and has a dividend yield of 3.10%, as recorded on March 20. It has been rewarding shareholders with growing dividends for the past 52 consecutive years.
AbbVie Inc. (NYSE:ABBV) is dedicated to developing and bringing innovative treatments to market across multiple healthcare sectors. As a leading pharmaceutical firm, its broad portfolio includes treatments in immunology, oncology, neurology, and eye care. It also holds a strong presence in the aesthetics industry, offering well-known cosmetic products like Juvederm and Botox for skincare and anti-aging. Since the start of 2025, its stock has risen by nearly 18%.
In the fourth quarter of 2024, AbbVie Inc. (NYSE:ABBV) reported revenue of $15.1 billion, reflecting a 5.6% year-over-year increase and exceeding analysts’ expectations of $14.87 billion. On a GAAP basis, the company posted a net loss of $0.02 per share, while adjusted diluted EPS reached $2.16, slightly above the projected $2.13. For the full year, combined sales of Skyrizi and Rinvoq soared to $17.7 billion, marking a 51% surge driven by strong global demand and market expansion. Excluding Humira, total revenue grew 18% year-over-year, with the neuroscience and oncology segments leading the growth.
7. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 88
An American pharmaceutical company, Bristol-Myers Squibb Company (NYSE:BMY) offers a wide range of related services and products to its consumers. The company is focusing its growth strategy on a pipeline of promising new treatments, with particular emphasis on its neuroscience drug, Cobenfy. If clinical trials yield positive results, this medication could significantly impact the company’s financial outlook.
Currently approved for schizophrenia, Cobenfy has the potential to generate up to $2 billion in peak sales from this indication alone. However, its true market opportunity lies in ongoing Phase III trials exploring its use for adjunctive schizophrenia treatment and Alzheimer’s disease psychosis. If the Alzheimer’s trial is successful, peak sales could soar to nearly $10 billion, making it a transformative asset for Bristol-Myers Squibb Company (NYSE:BMY).
In the fourth quarter of 2024, Bristol-Myers Squibb Company (NYSE:BMY) posted revenue of $12.34 billion, reflecting a 7.5% year-over-year increase. The company’s Growth Portfolio was a key driver, with revenue surging 21% to $6.4 billion, driven by strong demand for its leading treatments. Sales of Reblozyl, Breyanzi, and Camzyos saw substantial gains, climbing 71%, 125%, and 101%, respectively.
Bristol-Myers Squibb Company (NYSE:BMY) is a solid dividend payer, having paid regular dividends for the past 93 years. In addition, it maintains 16 consecutive years of dividend growth, which makes it one of the best dividend stocks on our list. Currently, it pays a quarterly dividend of $0.62 per share and has a dividend yield of 4.13%, as of March 20.
6. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 91
Merck & Co., Inc. (NYSE:MRK) is an American multinational pharmaceutical company, headquartered in New Jersey. The company’s substantial investment in research and development, along with its strategic emphasis on cardiovascular and rare diseases, reinforces confidence in its long-term revenue growth. In addition, the healthcare sector’s resilience during economic downturns enhances Merck’s attractiveness as an investment, as the demand for essential medications remains stable regardless of market conditions.
Merck & Co., Inc. (NYSE:MRK) reported strong financial performance, with revenue increasing 7% year-over-year to $15.6 billion. The company has strengthened its presence in specialty pharmaceuticals and oncology, with Keytruda remaining a cornerstone of its cancer treatment portfolio and a key contributor to revenue growth. Merck’s solid market position has enabled it to maintain consistent cash flow, supporting its commitment to shareholder returns.
For the full year, Keytruda sales jumped 18% from the previous year, reaching $29.5 billion. The drug is expected to generate more than $35 billion in revenue by 2028 before its patent expires, further cementing Merck’s leadership in the immunotherapy market.
Merck & Co., Inc. (NYSE:MRK)’s quarterly dividend comes in at $0.81 per share and has a dividend yield of 3.44%. It is one of the best dividend stocks on our list with 14 consecutive years of dividend growth under its belt.
5. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 92
Pfizer Inc. (NYSE:PFE) is a New York-based pharmaceutical and biotech company that specializes in a wide range of related services and products. The company reported a 12% operational revenue increase from its non-COVID products over the past year, showcasing its commitment to strategic execution. It successfully met its $4 billion net cost savings target through an ongoing cost realignment initiative and has now raised its goal to approximately $4.5 billion by the end of 2025. In addition, under its Manufacturing Optimization Program, Pfizer aims to achieve $1.5 billion in net cost savings by 2027, with the first benefits expected in the latter half of 2025. The company remains confident in its ability to restore operating margins to pre-pandemic levels in the coming years.
Pfizer Inc. (NYSE:PFE) has also focused on strengthening its presence in oncology, which was highlighted by a significant $43 billion acquisition of Seagen to enhance its cancer treatment portfolio. The company expects substantial growth in this segment over the next five years, with plans to double its patient base by 2030 and introduce at least three blockbuster drugs, each projected to generate over $1 billion in annual sales. Its progress in oncology is already evident, with revenue from this segment rising 25% in 2024.
Pfizer Inc. (NYSE:PFE), one of the best dividend stocks, offers a quarterly dividend of $0.43 per share, having raised it by 2.4% in December 2024. The stock offers an attractive dividend yield of 6.58%, as of March 20. It has been growing its payouts for 15 consecutive years.
4. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 98
Johnson & Johnson (NYSE:JNJ) is one of the most prominent healthcare companies globally. The company, through its subsidiaries, develops, manufactures, and sells a diverse range of healthcare products, with a strong emphasis on human health and well-being. It operates through two main segments: Innovative Medicine and MedTech. Over the past 15 years, it has reinforced its market position by focusing on brand-name drug development. Following the 2023 spinoff of its consumer health business, Kenvue, the Innovative Medicine segment now accounts for nearly two-thirds of total revenue. While brand-name drugs have a limited window of market exclusivity, their strong pricing power and high-profit margins remain key drivers of profitability.
In the fourth quarter of 2024, Johnson & Johnson (NYSE:JNJ) reported $22.5 billion in revenue, reflecting a 5.2% year-over-year increase. As a leading healthcare company, it continues to prioritize addressing critical medical needs, including multiple myeloma, lung cancer, inflammatory bowel disease, and heart failure.
Johnson & Johnson (NYSE:JNJ) MedTech segment saw global operational sales grow by 6.2%, with acquisitions and divestitures contributing 1.5% to this increase. The Cardiovascular division benefited from strong demand for electrophysiology products and Abiomed, while the General Surgery segment experienced growth driven by higher sales of wound closure products.
Johnson & Johnson (NYSE:JNJ) holds one of the longest dividend growth track records in the market, spanning over 62 years. The company offers a quarterly dividend of $1.24 per share and has a dividend yield of 3.04%, as recorded on March 20.
3. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 100
Thermo Fisher Scientific Inc. (NYSE:TMO), a multinational biotech and life sciences company, outperformed Wall Street expectations in the fourth quarter, posting earnings of $6.10 per share on revenue of $11.40 billion. Both figures exceeded analyst projections of $5.94 per share and $11.28 billion in revenue. While spending in the biotech sector has remained sluggish, potential interest rate cuts could help stimulate growth by improving access to funding.
Looking ahead, Thermo Fisher Scientific Inc. (NYSE:TMO) expects adjusted earnings for 2025 to be in the range of $23.10 to $23.50 per share, which is in line with market expectations. The company is regarded as a leader in the healthcare and pharmaceutical sectors, providing investors with exposure to industry growth without the risks tied to patent expirations or the pressure to develop breakthrough drugs. Its revenue is well-diversified, with over 80% coming from recurring sources, ensuring stability and reducing investment risk.
Thermo Fisher Scientific Inc. (NYSE:TMO)’s cash flow remained strong in the latest quarter, with operating cash flow reaching $3.3 billion and free cash flow totaling $2.8 billion. In fiscal year 2024, the company returned $4.6 billion to shareholders through dividends and share buybacks. On February 19, it announced a 10% increase in its quarterly dividend to $0.43 per share, marking its eighth consecutive year of dividend growth. The stock supports a dividend yield of 0.33%, as of March 20.
2. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 115
Eli Lilly and Company (NYSE:LLY) is a multinational pharmaceutical company that offers a wide range of related products and services to its consumers. In the fourth quarter of 2024, the company saw a 45% jump in revenue, reaching $13.53 billion, driven by strong demand for Mounjaro and Zepbound. Earnings per share (EPS) more than doubled, climbing 102% to $4.88. The company also made notable progress in expanding its drug pipeline, securing US approval for Zepbound to treat moderate-to-severe obstructive sleep apnea in adults with obesity, as well as approval for Omvoh for managing moderately to severely active Crohn’s disease.
Eli Lilly and Company (NYSE:LLY)’s rapid growth in recent years has been largely fueled by the success of its portfolio of glucagon-like peptide-1 (GLP-1) receptor agonist drugs. The stock has surged by nearly 8.5% since the start of 2025.
Eli Lilly and Company (NYSE:LLY) offers a quarterly dividend of $1.50 per share and has a dividend yield of 0.71%, as of March 20. It is one of the best dividend stocks on our list as the company has raised its payouts for 11 years straight.
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 150
An American health insurance company, UnitedHealth Group Incorporated (NYSE:UNH) offers a wide range of related services and products. Analysts noted that the company successfully lowered its operating cost ratio, largely due to strategic portfolio initiatives, which bodes well for future profitability. For fiscal year 2024, the operating cost ratio improved to 13.2%, down from 14.7% in 2023.
UnitedHealth Group Incorporated (NYSE:UNH) benefits from a diversified business model that spans health insurance, pharmacy benefits management, and healthcare services, positioning it for long-term growth. The integration across these segments enhances cross-selling opportunities and enables more efficient care delivery.
The company delivered strong fiscal year 2024 results, surpassing investor expectations. Revenue grew 8% to $400 billion, supported by broad-based expansion across its service offerings. Operating earnings totaled $32.3 billion, but after adjusting for costs related to a cyberattack and challenges in South America, adjusted operating earnings reached $34.4 billion.
UnitedHealth Group Incorporated (NYSE:UNH) also reported healthy cash flow, in line with investor expectations. It generated $24.2 billion in operating cash flow, amounting to 1.6 times its net income. Throughout 2024, the company returned over $16 billion to shareholders through dividends and stock buybacks. In the fourth quarter, the return on equity stood at 23.7%, reflecting strong earnings and effective capital management. The company currently offers a quarterly dividend of $2.10 per share and has a dividend yield of 1.65%, as of March 20. It has been paying regular quarterly dividends to shareholders since 2010.
Overall, UnitedHealth Group Incorporated (NYSE:UNH) ranks first on our list of the best dividend stocks in the healthcare sector. While we acknowledge the potential of UNH as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than UNH but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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