Mon. Nov 28th, 2022


With all the talk about bear markets, inflation and rising interest rates, some investors are looking for safer alternatives to riskier technology stocks. Health care stocks can be the safer alternative you are looking for. With an aging population, less stringent regulatory restrictions industry-wide (read less tech aversion), and increased focus on public health post-pandemic, health care is suddenly a hotbed of innovation.
So if you want to protect your portfolio and invest in a sector that will be impactful and profitable over the long haul, health care stocks are a great choice.
The main reason to consider health care stocks during a slowing economy and likely recession is that they are defensive. If you need to get a health procedure done, you will forgo almost any competing priorities to get it. Your health is not negotiable. As a result, some investors look into health care to limit their losses in a falling market. They know these stocks are not immune to price declines and other market forces, but generally, they should hold better than the overall market.
Let’s look at some of the health care stocks available to investors to see if they make sense for your portfolio.
UnitedHealth’s stock has been a solid performer with strong growth over the past five years and has yet to suffer a significant drop in value. The company provides health insurance policies for consumers and is expanding to offer policies through the ACA marketplace in many states. It recently acquired Change Healthcare, adding health care data analysis capability to its operations. The stock pays an annual dividend averaging 1.30%.
Cigna is one of the oldest health insurance companies in the U.S. It was founded in 1792 and continues to operate using solid operating principles that enable it to survive and thrive as a company. It’s a blue chip stock due to its low risk, relatively high return and excellent growth prospects in terms of stock price – analysts agree this stock is currently undervalued, with estimates ranging up from 10% predicted upside. The average dividend yield for Cigna stock is 1.61%.
Cardinal Health provides health care services across the U.S. and abroad. It seeks to provide affordable health care services by keeping costs low through efficient practices. Its annual revenue forecast is 5.67%, which isn’t great, but steady returns over the long run can be preferable to short-term gains. It’s a value-priced stock that experiences large swings in price over time but manages to trend up in price despite itself. The stock’s average dividend yield is 2.99%.
Acadia Healthcare focuses on providing mental health care to patients across the country. It focuses on providing special psychiatric care and addiction treatment in various settings. The company is poised for growth as the emotional toll of the pandemic drove more people to seek out therapy in large numbers. The pandemic caused the stock to increase in value, which it’s managed to retain even as the pandemic eases. The stock does not pay a dividend.
Regeneron Pharmaceuticals takes a novel approach to developing medications to help people recover from serious illnesses. The company is famous for its monoclonal antibody treatment for COVID-19 and is engaged in further research to uncover more applications for the treatment. Regeneron has been a bright spark in scientific research and consistently maintains its core operating values. Its stock price shot up in the early days of the pandemic and has yet to lose significant value. Regeneron stock does not pay a dividend.
AstraZeneca is an international pharmaceutical company that makes drugs for the prescription and non-prescription markets. It manufactures the popular acid reflux medication Nexium and multiple medicines for the treatment of diabetes. AstraZeneca’s focus on making medications for the long-term management of health care makes it an excellent stock to buy and hold for the long term. It pays an annual dividend yield of 3.57%.
Novartis is an international pharmaceutical company that researches and manufactures medication for treating serious illnesses. It aims to extend people’s lives and help them maintain or improve their quality of life. The company has been underperforming in the health care sector but is unlikely to go under any time soon. Its research plays a vital role in helping people live better lives during an adverse health event, and physicians will prescribe these medications to help their patients survive the worst aspects of an illness. The annual dividend yield for Novartis averages 4.36%.
Bristol-Myers Squibb is a U.S.-based, multinational pharmaceutical company that researches and manufactures medication for use at the prescription and over-the-counter levels. It’s a Fortune 500 company with annual revenue of $46.4 billion for the fiscal year 2021. The company has gained over 6% in the past five years and is at the forefront of medical innovation. Bristol-Myers Squibb was founded in 1887 and has shown its capability to be a medical innovation leader. It pays an annual dividend yield of 3.07%.
Abbott Laboratories is involved in developing and manufacturing medical devices, diagnostic tools, generic and branded medications and nutritional products. Abbott’s research division of pharmaceuticals split off into AbbVie back in 2013. It sells its products at the professional and retail levels of health care. Its products, including Ensure, Similac, Pedialyte and ZonePerfect, help people live healthier lives. Abbot Laboratories stock has a 1.91% annual dividend yield.
AbbVie split off from Abbott Laboratories in 2013 to focus on medical research. The company seeks to find ways to improve patients’ lives through the use of pharmaceuticals in areas that include oncology, neuroscience, virology, women’s health and eye care. Its stock has performed well since its inception and has seen a 52% increase in value over the last five years. AbbVie stock pays an annual dividend yield of 3.98%
Johnson & Johnson, also known as J&J, is a well-known brand that produces a wide variety of health care products at the consumer and medical industry levels. The company has been in trouble for different issues, including a class-action lawsuit over its talcum powder causing cancer in 2018, and its COVID-19 vaccine that had an increased risk of causing strokes. Despite these issues, the company has gained almost 35% over the past five years. Its stock pays an average dividend of 2.74%.
Pfizer made waves in the health care industry when it released its Pfizer-BioNTech COVID-19 vaccine to help control the spread of the virus. The stock has trended higher in the past five years and is about 20% off its highest price. Pfizer is producing medication for COVID-19 and other diseases and has a long history of solid performance. It pays an average dividend of 3%.
Merck is a global pharmaceutical and health care company researching and producing human medications, biological therapies, vaccines and animal health medications and products. It invented the Gardasil human papillomavirus vaccine to prevent the mutation of the virus into cancer at a later age. Merck’s stock spikes and drops precipitously based on the success or failure of its products as they reach the final stages of research. The company has gained almost 25% over the past five years despite the peaks and valleys in its stock price. The annual dividend yield averages 3.22%.
Novavax is an American company that primarily produces vaccines for emergent and established viruses. It currently has an authorized COVID-19 vaccine and has multiple COVID-19 vaccines in various stages of clinical trials. It also has vaccines for Ebola, MERS and SARS in clinical trials. The company’s stock price spiked during the height of the COVID-19 pandemic but has returned to pre-2020 pricing in recent months. Vaccine technology has made great strides recently, and Novavax has shown it can produce effective products against many viral diseases. The stock does not pay a dividend.
CVS is a retail pharmacy chain that operates the retail pharmacy chain CVS, CVS Caremark, which manages pharmacy benefits, health insurance provider Aetna, and owns multiple brands. Its offerings cover the general public’s physical and mental health needs. CVS has captured a large part of the health care market through health care services, products, and prescription and over-the-counter drugs. The company has gained almost 16% in value over the past five years and pays an annual dividend yield of 2.26%.
Teladoc Health engages in telemedicine and e-healthcare services for patients unable to reach a physical health care location. The company connects patients with physicians via the computer, mobile app, tablet, or telephone. Teladoc Health was founded in 2002 and has had middling stock performance since its initial public offering. Its stock price spiked throughout the COVID-19 pandemic but has given up its gains since the beginning of 2021. It’s lost 7.72% of its value over the last five years and does not offer a dividend.
When investing in health care stocks, there are many avenues you can take. You can go the insurance route, the medication route, the retail route and more. Because of this, it can be overwhelming for some investors to pick the right stocks. takes the guesswork out of investing. Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations. Then, it bundles them up in handy Investment Kits that make investing simple and – dare we say it – fun.
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