Triple Play in Healthcare

07/06/2016 8:00 am EST

Focus: STOCKS

Bob Ciura

Contributing Editor, Wyatt Investment Research

There's no doubt that the aging population is one of the most powerful trends in the US economy. The US Census tallies some 75 million Baby Boomers, those aged 51-69 years, states Bob Ciura, editor of Daily Profit.

With thousands of people retiring each day in America, that huge swell of Baby Boomers likely means a long-term increase in health-care spending in the US.

For investors, this trend could be very profitable. Higher demand for health care is a strong tailwind for the health-care sector. A number of highly profitable, health-care dividend stocks stand to benefit from the growing population of elders.

Here are three companies that have significant businesses catering to the aging demographic; each is a large cap, dividend-paying blue-chip.

Abbott Laboratories (ABT)

Abbott has four major businesses   ̶   nutrition, diagnostics, medical devices and pharmaceuticals   ̶   each of roughly equal size. Abbott is also growing through acquisitions. It bought out St. Jude Medical (STJ) this year for $25 billion.

Abbott has declared 370 consecutive quarterly distributions, going all the way back to 1924, and it has increased its dividend for 44 consecutive years, including an 8% bump last year.

Johnson & Johnson (JNJ)

J&J is a health-care conglomerate. Roughly 70% of its revenue is derived from businesses that are No. 1 or No. 2 in their industries.

As a result, J&J grew its adjusted earnings for the past 31 years in a row, and earns a "AAA" credit rating from Standard & Poor's. It has raised its dividend for 54 consecutive years.

Medtronic (MDT)

Like Abbott, Medtronic has pursued an aggressive acquisition strategy. Last year’s massive $49 billion takeover of Covidien expanded Medtronic’s position in hospital supplies.

In June, Medtronic raised its dividend by 13%, the 39th consecutive annual dividend increase for Medtronic.

Abbott, J&J, and Medtronic yield 2.7%, 2.7%, and 2%, respectively. All three stocks are blue-chip health care giants that could realize significant future growth thanks to the aging population.

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By Bob Ciura, Editor of Daily Profit

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