In this article, we will take a look at some of the best defensive dividend stocks to invest in.
US healthcare stocks have been under mounting pressure this year, largely due to policies introduced by the Trump administration. Despite the challenges, some investors believe the recent sell-off has made these stocks too attractive to ignore.
As of October 14, the S&P 500 health care sector— which includes pharmaceuticals, biotech firms, health insurers, and medical equipment companies— has gained just 3.46%, trailing the broader market’s nearly 14% return. Concerns over efforts to align US drug prices with international levels, tariffs on pharmaceuticals, and funding cuts for health research and Medicaid have all weighed on the sector’s performance.
However, earlier in October, both US and European healthcare stocks rallied after Pfizer reached an agreement with President Trump to lower prescription drug prices under the Medicaid program in return for tariff relief. The deal, viewed as less severe than initially feared, offered some relief and clarity to global drugmakers following a turbulent year marked by regulatory pressure and uncertainty over pricing policies. Given the current scenario, we will take a look at some of the best dividend stocks in the healthcare sector.
Our Methodology:
For this article, we used a screener to identify defensive healthcare stocks with stable business models and sound financials. From that list, we chose dividend healthcare stocks with a strong track record of paying dividends to shareholders, which makes them resilient in the current environment. The stocks are ranked according to their dividend yields as of October 14.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11. Eli Lilly and Company (NYSE:LLY)
Dividend Yield as of October 14: 0.74%
Eli Lilly and Company (NYSE:LLY) is an American multinational pharmaceutical company. The stock has surged by over 4% since the start of 2025.
Erste Group raised its rating on Eli Lilly and Company (NYSE:LLY) from Hold to Buy on October 13, citing the company’s strong performance during the first half of the year. The upgrade followed Eli Lilly’s decision to boost its full-year 2025 outlook for both revenue and earnings per share after reporting impressive mid-year results.
The drug maker now expects annual revenue between $60 billion and $62 billion, with earnings per share projected to fall between $21.80 and $23.00. According to Erste Group, the recently announced tariffs are expected to have only a limited effect, with those impacts already reflected in the company’s updated guidance. The firm also anticipates that Eli Lilly and Company (NYSE:LLY) will continue gaining market share within the pharmaceutical industry.
Eli Lilly and Company (NYSE:LLY) remains a favorite among dividend investors, having raised its dividend for 11 consecutive years. The company’s quarterly dividend comes in at $1.50 per share and has a dividend yield of 0.74%, as of October 14.
10. Cardinal Health, Inc. (NYSE:CAH)
Dividend Yield as of October 14: 1.33%
An American multinational healthcare services company, Cardinal Health, Inc. (NYSE:CAH) is among the best dividend stocks in the defensive healthcare sector.
On September 30, Cardinal Health, Inc. (NYSE:CAH) revealed plans to build a new flagship forward distribution center in Indianapolis, Indiana, aimed at expanding and modernizing its national pharmaceutical distribution network. The facility will incorporate advanced automation and cutting-edge technology to support the daily distribution of over 70,000 pharmaceutical and specialty products across the US.
Debbie Weitzman, CEO, Pharmaceutical & Specialty Solutions segment at Cardinal, made the following comment:
“We’re continuing to make strategic investments in our core distribution network to drive service, enhance efficiency, and meet the evolving needs of our customers with even greater reliability and responsiveness. Expanding and modernizing our distribution footprint reinforces our ability to drive growth and support our teams.”
This marks Cardinal Health, Inc. (NYSE:CAH)’s second pharmaceutical distribution center announcement since 2024. The Indianapolis facility is expected to be fully operational by fall 2027 and will create more than 100 new jobs in the state, which serves as an important logistics hub for the company.
Beyond its expansion plans, Cardinal Health, Inc. (NYSE:CAH) also stands out for its financial consistency, having increased its dividend for 39 consecutive years. Currently, it offers a quarterly dividend of $0.5107 per share and has a dividend yield of 1.33%, as of October 14.
9. The Cigna Group (NYSE:CI)
Dividend Yield as of October 14: 2.00%
The Cigna Group (NYSE:CI) is an American multinational company that provides managed healthcare and insurance services.
On October 14, Goldman Sachs analyst Scott Fidel initiated coverage of The Cigna Group (NYSE:CI) with a Buy rating and a price target of $370. In his note, he stated that the managed care sector is experiencing its steepest underwriting downturn in more than 15 years. Goldman Sachs recommends greater exposure to Medicare Advantage, anticipating a margin recovery phase starting in 2026, though it expects that rebound to vary across the industry. The firm also projects a slower recovery for Medicaid and the healthcare exchange markets.
The Cigna Group (NYSE:CI) has also drawn investor interest after Wells Fargo raised its price target on the stock to $354 from $340 on October 7 while maintaining an Equal Weight rating. The firm made this adjustment as part of its updated outlook for the sector ahead of Q3 2025 earnings, noting that the extension of enhanced subsidies now seems more probable.
The Cigna Group (NYSE:CI) continues to appeal to income-focused investors as well, with the company having raised its dividend for five consecutive years. It currently offers a quarterly dividend of $1.51 per share and has a dividend yield of 2.00%, as of October 14.
