The healthcare sector might not be at the forefront of exciting developments like artificial intelligence, but because good medical care is always in high demand, many healthcare companies boast stable, reliable businesses. That's precisely the kind that can also sustain growing dividends, making the industry pretty attractive for income-oriented investors.
Which healthcare stock can dividend investors safely buy? Let's consider two excellent options: AbbVie(NYSE: ABBV) and Amgen(NASDAQ: AMGN).
1. AbbVie
AbbVie continues to recover from one of the biggest patent cliffs in the pharmaceutical industry's history. Last year, its immunology drug Humira, the top-selling medicine of all time, lost patent exclusivity in the U.S. Yet, amazingly, the company got back to top-line growth in the second quarter, well ahead of management's prediction that this would happen in 2025.
AbbVie kept that pace up in the third quarter. Its revenue increased by 3.8% to $14.5 billion. True, that's below what would be considered "good" in the pharmaceutical industry, but against the background of Humira's decline, things are going just fine for AbbVie. The company's adjusted earnings per share increased by 1.7% year over year to $3. AbbVie's portfolio of drugs, especially Humira's heirs in immunology, Skyrizi and Rinvoq, are picking up the slack. But it's not just those two.
Cancer drug Venclexta was a winner during the period, as was AbbVie's Botox franchise, which is also helping pull revenue growth in the right direction. In other words, AbbVie's business remains strong. There will always be patent cliffs and other issues for the company. In fact, sales of Imbruvica, a cancer drug whose rights AbbVie shares with Johnson & Johnson, have been moving in the wrong direction for some time, including in the third quarter, due to competition.
However, AbbVie is proving it can handle these problems, partly thanks to its deep pipeline. That's what dividend investors want from a business: The ability to get through challenging periods and continue performing well without resorting to dividend cuts. AbbVie has increased its payouts despite Humira's loss of patent exclusivity. The company is a Dividend King with an active streak of 52 consecutive payout increases. The drugmaker's income program looks secure.
Dividend investors can safely add this stock to their portfolios this month.
2. Amgen
It hasn't been smooth sailing for Amgen in recent years. Some of the company's older products, such as rheumatoid arthritis medicine Enbrel, aren't performing well. Meanwhile, newer ones like cancer medicine Lumakras aren't yet making massive contributions to Amgen's top line. But the company is still managing solid performances. In the third quarter, Amgen's revenue grew by 23% year over year to $8.5 billion.
True, much of that growth wasn't organic. Amgen acquired Horizon Therapeutics in October of last year for about $28 billion. But even without that, Amgen's top line increased by 8% compared to the year-ago period organically, a solid performance. Tezspire, another of Amgen's newer medicines, is coming into its own. In the third quarter, Amgen recorded sales of $269 million from Tezspire, 67% higher than the prior-year quarter.
The medicine just reported positive phase 3 results in treating chronic rhinosinusitis (inflamed and swollen sinuses). Adding this indication could boost Tezspire's sales even more. Elsewhere, Amgen is developing a medicine in the most exciting area in the industry right now: weight loss. Amgen's potential anti-obesity medicine, MariTide, is currently in phase 2 studies. It looks like one of the more promising weight loss candidates around, and there are many, many of them.
According to some analysts, MariTide could generate as much as $2.1 billion in revenue by 2030. So, Amgen is still generating strong financial performances thanks to acquisitions and internally developed products. That is a constant for the company. Investors can expect Amgen to continue doing precisely that for the drugmaker over the long run. Lastly, Amgen might not be a Dividend King, but its track record is also impressive. Amgen has increased its payouts by 269% in the past decade and offers a forward yield of 2.77%.
Amgen is a great buy-and-hold dividend stock for this month, or any month.
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Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool has positions in and recommends AbbVie. The Motley Fool recommends Amgen and Johnson & Johnson. The Motley Fool has a disclosure policy.
