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Johnson & Johnson (JNJ), Express Scripts Holding Company (ESRX), Gilead Sciences, Inc. (GILD): Three Great Buy-and-Hold Health-Care Stocks

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This could have been an enormously more difficult effort. I started out with the goal to identify the three best stocks in health care to buy and hold for years, even decades. To come up with a list of the absolute best was daunting. There are just too many variables to say with unwavering conviction that any three stocks are the best to buy and hold.

Identifying great buy-and-hold health-care stocks, though, was much easier. There are plenty to choose from. Here are three that I think meet the mark.

1. Johnson & Johnson (NYSE:JNJ)
Picking Johnson & Johnson (NYSE:JNJ) was the easiest choice of all. If you look around your house, odds are you’ll find several J&J products. If you looked around the hospital nearest to your house, chances are you’d find multiple Johnson & Johnson (NYSE:JNJ) products there also. What makes J&J a great buy-and-hold investment is that this would have been as likely 20 years ago — and 20 years from now — as it is today.

Johnson & Johnson (JNJ)

J&J essentially consists of multiple businesses rolled into one. The company is probably best known for its consumer products such as Band-Aids and Listerine. It also claims a large medical devices and diagnostics division. Johnson & Johnson (NYSE:JNJ)’s pharmaceuticals segment developed blockbuster drugs including Remicade and Velcade.

With strong products and continual innovation, Johnson & Johnson (NYSE:JNJ) saw its stock climb more than 3,100% in the past 30 years and more than 800% in the past 20 years. Along the way, the company not only consistently paid out dividends — it raised them year in and year out also. If you had reinvested those dividends, by the way, that 30-year return soars to 5,800% and the 20-year return jumps to nearly 1,400%.

2. Express Scripts Holding Company (NASDAQ:ESRX)
Unlike J&J, Express Scripts Holding Company (NASDAQ:ESRX) doesn’t pay a dividend. However, the company’s pharmacy benefits management, or PBM, services should remain in demand for years to come. That’s especially likely as the baby boomer generation ages and needs more prescription drugs.

There are other PBMs that should prosper also. I like Express Scripts Holding Company (NASDAQ:ESRX), though, in large part because of its economies of scale as the largest PBM in the nation. That scale should serve as a competitive advantage in coaxing more members to use lower-cost sources like mail-order pharmacies, use cheaper generic drugs, and adhere to prescribed medication regimens.

If you bought the stock 20 years ago and held on, you would now be sitting on gains of almost 12,000%. Yep — a $10,000 investment in Express Scripts Holding Company (NASDAQ:ESRX) in 1993 would have turned into more than $1.1 million.

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