In this article, we discuss the 10 healthcare stocks to buy for a retirement stock portfolio.

Healthcare stocks are widely considered a cornerstone of a retirement portfolio due to their resilience, long-term growth potential, and ability to provide steady income through dividends. This sector encompasses pharmaceutical companies, healthcare providers, biotechnology firms, and medical device manufacturers, all of which are positioned to benefit from enduring trends like aging populations and advancements in medical technology. One of the most compelling reasons to include health stocks in a retirement portfolio is their defensive nature. Health care is a necessity, not a luxury, meaning demand for medical products and services remains steady, even during economic downturns. According to a report by Morningstar, the healthcare sector outperformed the broader market in 75% of US recessions over the past 50 years, demonstrating its ability to provide stability when other sectors falter.

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Global demographic trends also favor health stocks. The United Nations projects that the number of people aged 65 and older will double by 2050, reaching 1.5 billion. This aging population will drive increased demand for chronic disease management, prescription medications, and long-term care services. The US alone spends over $4.3 trillion annually on health care, according to the Centers for Medicare & Medicaid Services, accounting for nearly 20% of GDP. This figure is expected to rise to $6.8 trillion by 2030, driven by advances in medical technology and higher spending on aging-related health issues. Health stocks, particularly those of established pharmaceutical companies, often provide attractive dividend yields, making them ideal for income-focused retirees.

Drug giants are known for consistently paying and increasing dividends. Dividends provide retirees with regular income, reducing the need to sell assets during market downturns. The healthcare sector is also at the forefront of technological innovation, offering exposure to high-growth areas such as biotechnology, precision medicine, and artificial intelligence in healthcare. Healthcare stocks provide diversification in a retirement portfolio as well, balancing out more volatile sectors like technology or energy. Additionally, healthcare ETFs like the Health Care Select Sector SPDR Fund offer exposure to a wide range of companies, spreading risk while capturing growth potential. For example, Health Care Select Sector SPDR Fund has delivered a 10-year annualized return of 13.4%, outperforming many other sectors.

Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.

For this article, we selected health stocks that have solid businesses with recurring revenue streams, reliable dividend payouts, and burgeoning growth pipelines. These stocks are also popular among hedge funds. 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Retirement Stock Portfolio: Healthcare Stocks to Buy

10. Teladoc Health, Inc. (NYSE:TDOC)

Number of Hedge Fund Holders: 32    

Teladoc Health, Inc. (NYSE:TDOC) provides virtual healthcare services in the United States and internationally. There are a host of reasons why this company is a strong investment candidate. At the outset, the company’s better operational efficiency and profitability are reflected in the report for the third quarter of 2024. For instance, the reported revenue of the integrated care segment was $383.7 million, increasing by 2% year-over-year, and the adjusted EBITDA margin improved to 17.7%, which demonstrates the company’s strong financial health and the potential for continued growth and value creation for shareholders. In addition, the company has collaborated with Amazon to expand its market and help people access its chronic condition management programs. People can enroll in Teladoc’s programs, covering conditions such as diabetes, high blood pressure, prediabetes, and weight management, which would improve cardiometabolic health through personalized help.

9. Bio-Rad Laboratories, Inc. (NYSE:BIO)

Number of Hedge Fund Holders: 38     

Bio-Rad Laboratories, Inc. (NYSE:BIO) manufactures, and distributes life science research and clinical diagnostic products in the United States, Europe, Asia, Canada, and Latin America. This company is a great investment prospect due to numerous factors. For example, as per the report for the third quarter of 2024, the company showed a significant increase in net sales driven by the Clinical Diagnostics segment. Reported total net sales were $649.7 million, an increase of 2.8% compared to $632.1 million reported for the third quarter of the prior year. On a currency-neutral basis, quarterly sales increased 3.4% compared to the same period in 2023. In addition, the company also recognized a change in the fair market value of its investment in Sartorius AG, which substantially contributed to a net income of $653.2 million on a diluted basis versus a net income of $106.3 million on a diluted basis, reported for the same period of the prior year. Moreover, the company’s collaboration with Allegheny Health Network aims to generate clinical evidence across a range of cancer types to support the implementation of Bio-Rad’s Droplet Digital PCR technology for tumor-informed molecular residual disease (MRD) monitoring of patients with solid tumor cancer following curative-intent treatment.

8. Zoetis Inc. (NYSE:ZTS)

Number of Hedge Fund Holders: 62   

Zoetis, Inc. (NYSE:ZTS) discovers, develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products in the United States and internationally. There are several aspects that make this company an attractive investment choice. First and foremost, the company has achieved 6 consecutive years of dividend growth, exceeding the sector median of 2 years by 200%. Secondly, the company has maintained 6 consecutive years of dividend payments as well. Moreover, the company’s collaboration with Colorado State University’s AgNext to advance research in sustainable animal production holds investment potential. This partnership aims to shape the future and set new standards for sustainable management practices using animal health and genetic data.

7. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Holders: 63

CVS Health Corporation (NYSE:CVS) provides health services in the United States. There are several aspects that make this company an attractive investment choice. First and foremost, the company has great dividend growth, with 3 consecutive years of dividend growth, surpassing the sector median of 2 years by 50%. Secondly, the company has maintained 27 consecutive years of dividend payments, exceeding the sector median of 15 years by 80%. These metrics demonstrate the company’s ability to generate profit and provide value to shareholders over an extended period. Moreover, the company has announced that all commercial prescriptions dispensed at CVS Pharmacy will be reimbursed through CVS CostVantage. This innovative approach uses a transparent formula built on the drug acquisition cost, a set markup, and a fee to reflect the quality of pharmacy services provided.

6. HCA Healthcare, Inc. (NYSE:HCA)

Number of Hedge Fund Holders: 66    

HCA Healthcare, Inc. (NYSE:HCA) provides healthcare services in the United States. This company presents an exceptional investment opportunity for several reasons. The company’s commitment to returning value to its shareholders is witnessed in the report for the fourth quarter of 2024. The company has declared a quarterly cash dividend of $0.72 per share, which will be distributed to shareholders who own the company’s common stock as of March 17, 2025. Notably, the company has had 2 consecutive years of dividend growth, matching the sector median. Moreover, the company’s ongoing construction projects and upgrades, like opening a freestanding emergency room and launching intraoperative radiation therapy, show the company’s long-term planning that may hold investment potential. Additionally, the company is also planning a 20-bed expansion in behavioral health and a neuro-interventional suite set to open in spring 2025.

5. Pfizer Inc. (NYSE:PFE)

Number of Hedge Fund Holders: 80 

Pfizer Inc. (NYSE:PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. This company stands out as a worthwhile investment, owing to various compelling reasons. To begin, the company has shown impressive dividend growth, with 15 consecutive years of increases, significantly exceeding the sector median of 2 years by 600%. Notably, the company has also maintained 35 consecutive years of dividend payments, outperforming the sector median of 15 years by 133.33%. This shows a long-term commitment to rewarding shareholders and consistent performance in both dividend growth and payments. Moreover, the company is planning to advance the development of a once-daily formulation of Oral GLP-1 Receptor Agonist Danuglipron. The company is also planning to conduct dose optimization studies with a focus on the preferred formulation to inform the registration enabling studies.

4. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 81 

Johnson & Johnson (NYSE:JNJ) researches and develops, manufactures, and sells various products in the healthcare field. This company is a great investment prospect due to numerous factors. For example, the company has a remarkable history of returning value to shareholders through consistent dividend payments, with 62 consecutive years of dividend growth, surpassing the sector median of 2 years by 3,000%. The company has also sustained 62 consecutive years of dividend payments, exceeding the sector median of 15 years by 313.33%. This reflects the company’s strong commitment to returning value to shareholders and its financial strength. Moreover, J&J is integrating AI into its medical procedures, such as using app-based technology to detect subtle changes in speech patterns, cognition, and executive functioning to help identify individuals at the earliest stages of Alzheimer’s disease and track disease progression.

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

Number of Hedge Fund Holders: 86

Merck & Co., Inc. (NYSE:MRK) operates as a healthcare company worldwide. There are several aspects that make this company an attractive investment choice. The company has achieved 14 consecutive years of dividend growth, surpassing the sector median of 2 years by 600%. Secondly, the company has also maintained 35 consecutive years of dividend payments, outperforming the sector median of 15 years by 133.33%. This shows the company’s ability to generate profit and provide value to its shareholders, which are indicators of strong financial growth. Moreover, the company has also announced a $17 million commitment over five years (2025-2030) to advance equitable access to culturally responsive care for people with heart conditions in the US communities.

2. Thermo Fisher Scientific Inc. (NYSE:TMO)

Number of Hedge Fund Holders: 98

Thermo Fisher Scientific Inc. (NYSE:TMO) offers life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and services worldwide. This company offers significant investment potential for multiple reasons. The first compelling factor is the company’s commitment to returning value to shareholders through regular dividend payments. The company has a history of increasing its quarterly dividend, with the most recent payment of $0.39 per share in January 2025. Notably, the company has shown strong performance in dividend growth, with 7 consecutive years of increases, significantly outperforming the sector median of 2 years by 250%. Secondly, the company has completed the repurchase of $1 billion of its common stock, which shows the value it provides to its shareholders. Moreover, Thermo Fisher Scientific’s ongoing and long-term strategic collaboration with Moderna aims to enable dedicated large-scale manufacturing in the US of Spikevax, Moderna’s COVID-19 vaccine, and other investigational mRNA medicines in its pipeline.

1. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 112 

United Group Incorporated (NYSE:UNH) operates as a diversified healthcare company in the United States. There are several aspects that make this company an attractive investment choice. It has a commendable track record of returning value to shareholders via consistent dividend payments. It has achieved consistency in dividend growth with 15 consecutive years of increases, surpassing the sector median of 2 years by 650%. Additionally, UNH has maintained 22 consecutive years of dividend payments, exceeding the sector median of 15 years by 46.67%. This demonstrates the company’s financial stability and shareholder commitment. Moreover, the company has initiated a 15-year-long power purchase agreement with Orsted Mockingbird Solar Center in Lamar County. The main aim of this agreement is to purchase clean energy — enough to power an estimated 54,000 US homes — generated by the solar facility.

While we acknowledge the potential of UnitedHealth Group Incorporated (NYSE:UNH) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than UnitedHealth Group Incorporated (NYSE:UNH) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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