12 Defensive Healthcare Dividend Stocks To Invest In

In this article, we discuss 12 defensive healthcare dividend stocks to invest in.

The healthcare sector has undergone significant evolution over the years, especially after the pandemic. Advances in medical technology, pharmaceuticals, and treatment approaches have transformed patient care and outcomes. The integration of digital health technologies has revolutionized how healthcare is delivered. These changes in healthcare are becoming permanent because people are getting used to the new normal. In addition to this, healthcare spending in the US has grown significantly over the years. In its recent report, Bloomberg referred to the government’s data, highlighting that health spending in the US is expected to reach nearly $7.2 trillion by 2031, and this spending will grow faster than the overall economy in the coming years. Healthcare expenses are projected to make up 19.6% of the country’s total economic output (GDP), up from 18.3% in 2021. This includes both government and private spending, as reported in a recent analysis published in the journal Health Affairs. The report also mentioned that the US spent $4.3 trillion on healthcare in 2021, which was a higher percentage of its economy than any other developed nation.

The healthcare industry is lagging behind the broader market this year due to growing inflation and labor shortages. The S&P 500 Health Care has declined by 6.49% year-to-date, underperforming the broader market, which has gained 10.27% this year so far. Even though the U.S. economy has been strong this year, some investors who are optimistic about healthcare stocks think that the Federal Reserve’s planned interest rate increases could eventually hurt the economy. Emily Roland, co-chief investment strategist at John Hancock Investment Management, remained bullish on the sector. Here are some comments from the analyst:

“The healthcare sector offers some defense in a period where the lagged impact of Fed tightening is likely to cause economic growth to contract.”

The industry is projected to see earnings increase by 12.8% in 2024, which is slightly better than the 11.8% growth expected for the S&P 500. This growth is driven in part by greater demand for products like obesity drugs, as indicated by data from LSEG. In addition to this, the sector has attracted the third-highest amount of investments so far this year, according to BofA’s data.

The health industry possesses the defensive classification because healthcare services and products are essential and maintain relatively stable demand, even during economic downturns. Moreover, health stocks also offer dividends to shareholders, which can be a source of reliable income for them, particularly those seeking income and yield. UnitedHealth Group Incorporated (NYSE:UNH), Eli Lilly and Company (NYSE:LLY), and Merck & Co. Inc. (NYSE:MRK) are some of the best dividend stocks from the healthcare sector. In this article, we will further discuss defensive healthcare dividend stocks.

Our Methodology:

For this list, we scanned Insider Monkey’s database of Q2 2023 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 Q2 2023.

12. Viatris Inc. (NASDAQ:VTRS)

Number of Hedge Fund Holders: 42

Viatris Inc. (NASDAQ:VTRS) is an American global pharmaceutical company that was formed through the merger of Mylan N.V. and Upjohn, a division of Pfizer Inc. The company started paying dividends in 2021 and has raised its payouts once since then. It currently pays a quarterly dividend of $0.12 per share and has a dividend yield of 5.16%, as of October 22.

In addition to VTRS, UnitedHealth Group Incorporated, Eli Lilly and Company, and Merck & Co. Inc. are some other health dividend stocks to consider.

In the second quarter of 2023, Viatris Inc. reported an operating cash flow of $515 million and its free cash flow came in at $447 million. The company returned $144 million to shareholders through dividends during the quarter, which makes it one of the best dividend stocks in the healthcare sector.

At the end of Q2 2023, 42 hedge funds in Insider Monkey’s database reported having stakes in Viatris Inc., down from 46 in the previous quarter. The collective value of these stakes is over $1.12 billion. With over 17.7 million shares, Deerfield Management was the company’s leading stakeholder in Q2.

11. Cardinal Health, Inc. (NYSE:CAH)

Number of Hedge Fund Holders: 44

Cardinal Health, Inc. (NYSE:CAH) is a global healthcare services and products company. The company plays a crucial role in the healthcare industry by providing various services and products that support the delivery of healthcare, improve efficiency, and enhance patient care.

On August 9, Cardinal Health, Inc. declared a quarterly dividend of $0.5006 per share, which was in line with its previous dividend. The stock’s dividend yield on October 22 came in at 2.17%. The company has been raising its dividends consistently for the past 37 years.

As of the end of Q2 2023, 44 hedge funds tracked by Insider Monkey reported having stakes in Cardinal Health, Inc., compared with 50 in the previous quarter. The consolidated value of these stakes is over $1.36 billion.

10. Amgen Inc. (NASDAQ:AMGN)

Number of Hedge Fund Holders: 57

Amgen Inc. (NASDAQ:AMGN) is a California-based biotech company that is known for its pioneering work in biotechnology, specifically the development of biologic drugs. The company offers a quarterly dividend of $2.13 per share and has a dividend yield of 3.06%, as of October 22. It is one of the best dividend stocks on our list as the company has raised its dividends every year since 2011.

At the end of June 2023, 57 hedge funds in Insider Monkey’s database reported having stakes in Amgen Inc., the same as in the previous quarter. The collective value of these stakes is over $1.5 billion. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q2.

9. Medtronic plc (NYSE:MDT)

Number of Hedge Fund Holders: 63

Medtronic plc (NYSE:MDT) is a multinational medical technology company that also manufactures surgical instruments and equipment for various medical procedures. The company has a 46-year run of raising its dividends and it currently pays a quarterly dividend of $0.69 per share. The stock’s dividend yield on October 22 came in at 3.81%.

Medtronic plc (NYSE:MDT) generated strong cash in its fiscal Q1 2024, with its operating cash flow amounting to over $875 million. The company’s free cash flow for the period came in at $521 million.

Of the 910 hedge funds in Insider Monkey’s database, 63 funds owned stakes in Medtronic plc (NYSE:MDT), up from 52 in the previous quarter. The total value of these stakes is over $1.86 billion.

8. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Holders: 66

CVS Health Corporation (NYSE:CVS) is an American healthcare company that operates in several different areas within the healthcare industry. On September 21, the company declared a quarterly dividend of $0.605 per share, which fell in line with its previous dividend. It has raised its dividends for two years in a row. With a dividend yield of 3.51% as of October 22, CVS is one of the best dividend stocks on our list.

In the second quarter of 2023, CVS Health Corporation reported revenue of roughly $89 billion, which showed a 10.3% growth from the same period last year. Year-to-date, it generated an operating cash flow of $13.3 billion. The company also returned $795 million to shareholders through dividends during the quarter.

At the end of the second quarter of 2023, 66 hedge funds tracked by Insider Monkey reported having stakes in CVS Health Corporation, worth collectively over $2.17 billion.

7. Bristol-Myers Squibb Company (NYSE:BMY)

Number of Hedge Fund Holders: 66

Bristol-Myers Squibb Company (NYSE:BMY) is next on our list of the best dividend stocks from the healthcare sector. The global pharmaceutical company has been growing its dividends consistently for the past 17 years. It offers a quarterly dividend of $0.57 per share and has a dividend yield of 4.07%, as of October 22.

As of the end of the June quarter of 2023, 66 hedge funds, compared with 69 in the previous quarter, owned stakes in Bristol-Myers Squibb Company, according to Insider Monkey’s database. The total value of these stakes stands at roughly $1.7 billion. With over 4.3 million shares, Pzena Investment Management was the company’s leading stakeholder in Q2.

6. Pfizer Inc. (NYSE:PFE)

Number of Hedge Fund Holders: 73

Pfizer Inc. (NYSE:PFE) is one of the largest pharmaceutical companies globally and is involved in various aspects of the pharmaceutical and healthcare industry. On October 4, the company announced a quarterly dividend of $0.41 per share, which was consistent with its previous dividend. Overall, its dividend growth streak stands at 13 years, which makes PFE one of the best dividend stocks in the health sector. The stock has a dividend yield of 5.32%, as of October 22.

PFE is a good addition to dividend portfolios alongside UnitedHealth Group Incorporated, Eli Lilly and Company, and Merck & Co. Inc..

As per Insider Monkey’s database of Q2 2023, 73 hedge funds owned stakes in Pfizer Inc., with a collective value of over $1.5 billion.

5. AbbVie Inc. (NYSE:ABBV)

Number of Hedge Fund Holders: 74

AbbVie Inc. (NYSE:ABBV) is an Illinois-based pharmaceutical company that primarily focuses on research, development, and commercialization of pharmaceuticals. On September 8, the company declared a quarterly dividend of $1.48 per share, which was in line with its previous dividend. The stock has a dividend yield of 4.05%, as of October 22. The company has been raising its dividends consistently for the past 50 years, which makes it one of the best dividend stocks in the healthcare sector.

At the end of Q2 2023, 74 hedge funds tracked by Insider Monkey reported having stakes in AbbVie Inc., compared with 75 in the previous quarter. The consolidated value of these stakes is over $2.3 billion.

4. Cigna Corporation (NYSE:CI)

Number of Hedge Fund Holders: 74

Cigna Corporation (NYSE:CI) is a global health services company that operates in the healthcare and insurance industries. In the second quarter of 2023, the company reported revenue of $48.6 billion, which showed a 6.8% growth from the same period last year. For FY23, it expects to generate over $9.5 billion in operating cash flows.

Cigna Corporation, one of the best dividend stocks on our list, currently pays a quarterly dividend of $1.23 per share. The company has raised its dividends for three consecutive years. The stock’s dividend yield on October 22 came in at 1.60%.

Cigna Corporation was a part of 74 hedge fund portfolios at the end of Q2 2023, compared with 79 in the previous quarter, according to Insider Monkey’s database. The collective worth of these stakes is over $4.06 billion.

3. Merck & Co., Inc. (NYSE:MRK)

Number of Hedge Fund Holders: 78

Merck & Co., Inc. is a New Jersey-based multinational pharmaceutical company that is involved in various aspects of healthcare and pharmaceutical research and development. The company offers a quarterly dividend of $0.73 per share and has a dividend yield of 2.84%, as of October 22. Its dividend growth streak currently stands at 11 years, which makes MRK one of the best dividend stocks on our list.

With a collective stake value of over $2.65 billion, 78 hedge funds in Insider Monkey’s database reported having positions in Merck & Co., Inc. in Q2 2023. In the previous quarter, 75 hedge funds owned stakes in the company.

2. Eli Lilly and Company (NYSE:LLY)

Number of Hedge Fund Holders: 87

Eli Lilly and Company is an American pharmaceutical company, headquartered in Indiana. The company offers a quarterly dividend of $1.13 per share and has been growing its dividends consistently for the past ten consecutive years. In addition to this, the company has been rewarding shareholders with uninterrupted dividends for 138 years. As of October 22, the stock has a dividend yield of 0.77%.

Of the 910 hedge funds in Insider Monkey’s database, 87 funds owned stakes in Eli Lilly and Company in Q2 2023, jumping from 72 in the previous quarter. The collective value of these stakes is more than $5 billion.

Baron Funds mentioned Eli Lilly and Company in its Q3 2023 investor letter. Here is what the firm has to say:

“Eli Lilly and Company (NYSE:LLY)and Company is a global pharmaceutical company that discovers, develops, manufactures, and sells medicines in the categories of diabetes, oncology, neuroscience, and immunology, among other areas. Stock performance was strong due to strong second quarter sales of blockbuster diabetes/obesity medicine Mounjaro and ongoing enthusiasm surrounding the company’s obesity and diabetes franchises, particularly after Novo Nordisk released its SELECT trial results. We continue to think Lilly is well positioned to grow revenue and earnings at attractive rates through the end of the decade and beyond.

We have positioned the Fund to benefit from this trend by maintaining a large position in Eli Lilly and Company, which we believe will remain a leader in the field with its drug Mounjaro and its deep pipeline of next generation GLP-1 medicines. Analysts now estimate the GLP-1 drug class could surpass $100 billion in revenue by the end of the decade and we expect Lilly to hold a meaningful share of that market.”

1. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 111

UnitedHealth Group Incorporated tops our list of the best dividend stocks from the healthcare sector. The multinational healthcare and insurance company has grown its dividends for 13 years in a row. It currently pays a quarterly dividend of $1.88 per share and has a dividend yield of 1.43%, as of October 22.

At the end of June 2023, 111 hedge funds tracked by Insider Monkey owned stakes in UnitedHealth Group Incorporated, compared with 116 in the previous quarter. The consolidated value of these stakes is over $10 billion.

You can also take a look at 13 Best Solar Energy Stocks To Invest In Heading Into 2024 and Top Investors’ Stock Portfolio: 10 Small-Cap Stocks To Buy

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This article is originally published at Insider Monkey.