3 Top Healthcare Dividend Stocks for 2019
December 7, 2018
These Stocks Yield Up to 7%
If you want to make a lot of money in 2019, you need to pay attention to healthcare.
Regular readers know I love owning elite dividend stocks that provide the “basics.” Everyone needs to eat, light their homes, and take out the trash.
And everyone needs to take care of their health. For that reason, stocks like Abbott Laboratories (NYSE:ABT), Johnson & Johnson (NYSE:JNJ), and Eli Lilly And Co (NYSE:LLY) have proven to be such lucrative investments.
When you invest in healthcare, you don’t need to worry about trade wars or rising interest rates. If you can use history as any guide, these companies will soldier through any downturn—while paying out bigger dividends to shareholders.
But you want to know the best part?
Healthcare companies now have a big investment tailwind at their backs. And that has resulted in booming profits for shareholders.
Each day, 10,000 baby boomers turn 65. And by 2060, analysts project the number of seniors in America to more than double. That means more surgeries, more prescriptions, and more doctor visits.
Healthcare accounts for $0.18 out of every dollar spent in this country, but that figure will grow significantly in the years ahead.
So how do you profit?
Frankly, you can throw a dart at any large healthcare company and make money right now. When the pot is this big, everyone gets their share.
Of course, some stocks will do better than others. And if I know my readers, they generally want those bigger profits to translate into dividend checks.
So today, I’ve prepared a list of my top healthcare dividend stocks for 2019.
All three of these stocks look poised to benefit from the boom in medical spending. Combined with entrenched market positions, they’ll likely enjoy better-than-average margins to boot.
More importantly, all of these stocks have track records of paying steady dividends to shareholders. That combination of growth and income should result in respectable returns for 2019.
This Company Could Help Solve the Opioid Crisis
America has an opioid problem. Last year, 72,000 died in the United States from drug overdoses. For comparison, the country lost only 58,000 soldiers during the entire Vietnam War.
Medtronic PLC (NYSE:MDT) has a solution: spinal cord stimulators. Like opioids, these devices mask pain. But rather than alter a patient’s brain chemistry, stimulators block nerve signals through electrical currents. That delivers pain relief without the risk of addiction.
With doctors under pressure to reduce narcotic prescription, total industry sales topped $2.0 billion last year. But Wall Street analysts project that revenue could grow as large as $20.0 billion.
Medtronic’s business, however, goes well beyond pain therapy. The company controls 50% of the global pacemaker market. It also enjoys booming sales from other products that assist with spinal surgeries and diabetes care.
Management has long committed to paying out 50% of free cash flow to shareholders as dividends. With profits poised to grow in the coming years, shareholders can expect respectable distribution growth.
Small Stock Delivers Big Dividend Growth
I doubt you’ve ever heard of medical device maker Atrion Corporation (NASDAQ:ATRI). The company’s market capitalization barely tops $1.0 billion, and not a single analyst on Wall Street covers this stock.
But what Atrion lacks in size, it more than makes up for in profitability. Rather than competing in big markets, the company has carved out a business in smaller niches. It supplies crucial items for optometrists, cardiologists, and other specialized medical professionals.
And those bets have clearly paid off. Last quarter, the company saw earnings jump 16% year-over-year, while gross margins topped nearly 50%. Such outstanding profitability has allowed management to boost the dividend more than fourfold over the past decade.
This Top Dividend Stock Yields 7%
If you want to make a lot of money during a boom, it often makes more sense to invest in “pick and shovel” plays. Rather than betting the farm on a single project, these companies provide vital tools and services to industry participants. They often represent the safer and more profitable opportunities.
Case in point: Omega Healthcare Investors Inc (NYSE:OHI). This real estate investment trust owns a portfolio of senior housing properties across the country.
But rather than running these facilities themselves, management has opted to lease out their assets to operators. That results in steady rental income without doing the low-margin work of caring for patients.
This has created quite the income stream. Today, Omega pays out a quarterly distribution of $0.66 per unit, which comes out to an annual yield of nearly seven percent. Given the growing number of seniors looking for care, I suspect that this payout will grow substantially in the years ahead.
