Most investors can easily choose exposure to healthcare stocks by investing in an ETF or mutual fund; however, some investors will prefer to invest in individual stocks — which have higher risk exposure, but will offer higher return potential in most cases, notes income expert Ned Piplovic, editor of DividendInvestor.
We used our dividend screener to search for equities with certain characteristics that would make them appealing to investors looking to check multiple categories with the same securities. The benefit of this strategy is that investors can simplify their investment portfolio and achieve investment goals with fewer individual equities.
We looked at healthcare stocks with a market cap of more than $10 billion that have raised their annual dividend for at least 10 consecutive years, as well as provided a positive combined dividend income and share-price growth total return in the past 12 months. The list ranks the six equities by their one-year total return from lowest to highest.
CVS Health Corporation (CVS)
The CVS Health Corporation’s current 2.67% dividend yield is 40% higher than the company’s 1.9% five-year average. While the steady dividend payout growth over the five-year period contributed to the yield increase, the company’s share price decline in recent months boosted the yield.
Despite the share price’s recent struggles, the company’s rising dividend managed to compensate enough to deliver a 2% total return over the past 12 months. While that might seem like a small return, it could signify a move in the right direction compared to a 22.8% total loss over the past three years. Investors should look for the next ex-dividend date in late September 2018.
Johnson & Johnson (JNJ)
With 55 consecutive annual dividend hikes, Johnson & Johnson is one of the Dividend Aristocrats. The company’s current 2.7 yield is even with the company’s average yield over the past five years. Johnson & Johnson’s share price interrupted its decade-long uptrend and lost more than 25% in the first half of 2018.
However, since late May 2018, the share price recovered more than half of those losses and continues to rise. Despite the share price pullback, the company managed to deliver a total return of 4.6% over the past 12 months. However, long-term total returns were significantly higher with 52% and 73% over the past three and five years, respectively. The company’s next ex-dividend date will occur in late November 2018.
3M Company (MMM)
After advancing more than 450% between February 2009 and late January 2018, the company’s share price pulled back 22% and resumed its uptrend after its 52-week low at the beginning of May 2018. Even with the share price decline, the 3M Company — a Dividend Aristocrat with six decades of consecutive annual dividend hikes — rewarded its shareholders with a total return of more than 6% over the last year.
However, the current share price uptrend could potentially lead this equity back towards total returns similar to the 55% total return over the past three years and 104% over the last five years. The company’s next ex-dividend date should occur in late November.
AmerisourceBergen Corporation (ABC)
After decades of relatively steady asset appreciation, the company’s share price dropped more than 50% in 2015 and 2016 and has been trading with increased volatility since then. However, through the amplified volatility, the share price managed to ascend 20% since October 2016.
This share-price uptrend combined with the rising dividend to reward shareholders with a 15% total return over the last year to spark a significant reversal from a 7.6% total loss over the past three years. The five-year total return was more than 67%.
The company hiked its annual dividend for the past 14 consecutive years, with the average annual growth rate of nearly 10% over those past three years. The company’s next ex-dividend date should occur in mid-September, with an early-December pay date.
Medtronic PLC (MDT)
Medtronic ’s 40 consecutive years of annual dividend boosts, an average dividend growth rate of more than 21% over the past three years and a 23.3% one-year total return were enough to place the company high on this list, but slightly short of the top spot.
In addition to the strong one-year total return. The company’s share price advancement of more than 20% over the past 12 months and 62% over the past five years contributed to the rising dividend income to deliver a 38% three-year total return and a 102% total return over the past five years. The company has set its next ex-dividend date for September 27, 2018 with an October 19, pay date.
Stryker Corporation (SYK)
Stryker managed to outperform Medtronic by the slightest of margins and take the top spot with 19 years of consecutive annual dividend hikes, an average dividend growth rate of more than 11% over the past three years and a 23% total return over the past 12 months.
With a virtual tie on the previous set of metrics, Stryker won because it also rewarded its shareholders with robust total returns of 75% and 166% over the past three and five years, respectively. Investors should expect a declaration of the next dividend any day with a late-September ex-dividend date and a pay date approximately one month later.
