No investment in the equity markets (or anywhere else, for that matter) is entirely risk-free. However, some stocks look safe enough to allow investors to rest easy at night, knowing the shares are highly unlikely to experience significant losses. Though corporations in this category tend to have less upside potential, they have a place in the portfolios of investors with a long-term mindset.
Here are two strong candidates along those lines: Johnson & Johnson(NYSE: JNJ) and HCA Healthcare(NYSE: HCA). Read on to find out why these healthcare stocks are worth holding onto for a long time.
1. Johnson & Johnson
A company doesn't last for more than a hundred years by accident. Johnson & Johnson has been around that long and has survived recessions, depressions, administrations from across the political spectrum, and more. That's made possible largely thanks to a culture of innovation that transcends any particular CEO or management team the company has had. Johnson & Johnson routinely develops important, lifesaving medicines and medical devices.
The company's portfolios in these areas are among the deepest and most impressive in these industries. Revenue and earnings growth, though not extraordinary, is generally steady and reliable, especially once you zoom out.
It's true that Johnson & Johnson is currently facing significant headwinds, including a barrage of lawsuits and a relatively new law that will allow Medicare in the U.S. to negotiate the prices of some drugs. That will almost certainly reduce the average selling prices of some of J&J's medicines, and, by extension, the company's revenue from them.
Johnson & Johnson's long and successful history should give investors confidence that it can navigate these troubles. The past isn't a guarantee of anything, but there is no denying the company's strong underlying business and its ability to continue delivering solid results across very different periods and under varied legal and regulatory circumstances. Johnson & Johnson is one of the rare companies with a credit rating that is higher than that of the U.S. government itself.
JNJ Revenue (Annual) data by YCharts.
Here's another piece of evidence of Johnson & Johnson's reliability: The company has raised its dividend payout for 62 consecutive years. That requires stability and the ability to consistently grow earnings and cash flows -- precisely what J&J has done for a long time. Opting to reinvest those dividends will boost long-term returns, too. So while it is worth keeping an eye on Johnson & Johnson's current headwinds, it remains one of the safer options I know of in the stock market.
Johnson & Johnson is an excellent pick for income-seeking investors with a "buy and hold forever" mindset.
2. HCA Healthcare
HCA Healthcare has also been around for a while. The company's history dates back to the late 1960s. It is one of the leading hospital chains in the U.S., with a vast network of facilities across the country, particularly concentrated in Texas and Florida. Breaking into this business and challenging established leaders is difficult for at least two reasons. First, building medical facilities is capital intensive -- it requires a significant up-front investment.
Second, hospital chains that have been around a while, like HCA Healthcare, have built relationships with patients, communities, doctors, and third-party payers. Consumers tend to gravitate toward products and brands they know and trust. That is especially true in the healthcare field, where people's lives are at stake. These factors grant HCA Healthcare a significant advantage that should allow it to remain a leader for a while.
And even among already established major players in the market, the company has grown its share. It was just 23% in 2011; by the end of 2019, it was about 26.5%, and in 2022, it had reached about 28%. That's meaningful and impressive growth in a competitive industry like the one in which HCA Healthcare operates.
It accomplished this feat even during the difficult pandemic years, when occupancy levels (a key determinant for total revenue in the industry) in its facilities and those of its competitors fluctuated due to the public health crisis. In other words, HCA Healthcare handled the outbreak at least as well as its peers. Financial results have been strong over the past decade, too.
HCA Revenue (Annual) data by YCharts.
HCA Healthcare should benefit from increasing lifespans, along with the growing elderly population, over the coming decades. By positioning itself well to provide medical care for seniors, HCA Healthcare should deliver outsize returns for a while.
Should you invest $1,000 in Johnson & Johnson right now?
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