Steady growth and dividend increases over decades can make investors remarkably wealthy.
Volatility is a part of life for long-term investors. The reasons the market goes up or down change, but the constant is that high-quality stocks, businesses that increasingly make more money over time, will reward investors if you wait long enough.
The market’s occasional ups and downs are a feature, not a bug. Use market downturns as opportunities to invest in long-term winners that continue to grow, pay, and raise dividends over time.
Not sure where to look? Consider the U.S. healthcare industry, where annual spending accounts for over 17% of America’s economy. It’s fertile ground for growth, and several healthcare stocks boast years of impressive performance.
Here are five examples, each with a stellar track record of dividend growth, making them worth considering whenever the market declines.
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1. Zoetis
Animal healthcare company Zoetis (ZTS 1.52%) has developed devices and therapies for treating pets and livestock animals for decades. However, the company has only been public since splitting off from Pfizer in 2013. Zoetis is a global company with $9.3 billion in annual sales, specializing in treatments for dogs, cats, horses, cattle, swine, poultry, fish, and sheep.
The company has paid and raised its dividend for 12 consecutive years, and the payout ratio is still just 32% of earnings. Younger generations spend more on pets, which should drive growth as millennials and Gen Z age and become the economy’s primary spenders. Wall Street expects Zoetis to grow its earnings by an average of 10% annually over the long term, making this dividend growth stock appealing to a broad range of investors.
2. Johnson & Johnson
Healthcare conglomerate Johnson & Johnson (JNJ 0.78%) has the longest dividend streak on this list, at 63 consecutive years. This Dividend King boasts far-reaching business units in pharmaceuticals and medical devices, selling its products worldwide. The company continues to grow steadily through a combination of innovation and strategic acquisitions, and is one of only two companies with an AAA credit rating.
Johnson & Johnson’s current dividend yield of 3.3% offers solid income from the jump. The company is poised to continue raising that payout for the foreseeable future, with a payout ratio of just over half its earnings, and an expected long-term annualized earnings growth rate of 8%. And with a very low beta of 0.4, the stock can stabilize your portfolio in a market downturn.
3. Abbott Labs
Investors seeking a diverse healthcare stock should consider Abbott Laboratories (ABT 0.48%), another Dividend King with over five decades of consecutive dividend increases. The company had to evolve over the past decade, restructuring its business after spinning off AbbVie in 2012. Today, Abbott specializes in consumer and professional-grade products, ranging from nutrition to medical devices for diabetes and cardiovascular care.
Abbott’s reshuffling has been successful. The company has raised its dividend by an average of over 11% annually for the past five years, and the dividend payout ratio remains under 30%. Considering that analysts expect Abbott to grow earnings at a 9% annualized rate over the long term, investors should build on a dividend yielding 1.8% today.
4. Stryker
Global healthcare giant Stryker Corp. (SYK 0.72%) isn’t as consumer-facing as some of these other names. The company develops and sells a range of products, including orthopedic devices and instruments and equipment used in surgery and other professional healthcare settings. Innovation is a competitive advantage for the company, which owns over 14,000 patents.
Stryker is working on an ongoing 32-year streak of dividend growth. The dividend currently yields only about 0.9%, but there is ample room for more increases. The payout ratio is approximately 43% of earnings, and analysts estimate Stryker will grow its earnings by an average of almost 10% annually over the long term. That could mean years of high-single-digit dividend growth without breaking a sweat.
5. Medtronic
Medical devices and equipment are a key theme on this list, and Medtronic (MDT 0.54%) is another prominent player in this massive space, where innovation can directly lead to better treatments and care for patients. Medtronic develops products and devices for applications across cardiovascular, neuroscience, and surgical areas. The stock is almost a Dividend King, with 47 consecutive annual dividend raises.
Medtronic offers investors a solid 3.2% starting yield. The payout ratio is a little high at 77%, but that shouldn’t threaten its safety. Meanwhile, analysts estimate that Medtronic will grow its earnings by an average of over 5% annually over the long term. The company has also announced its intention to separate its diabetes business into a stand-alone entity. Management anticipates that spinning off its diabetes business will enhance the company’s profit margins and earnings, a welcome potential boost for a quality business, but one that’s not poised to grow as fast as the others listed here.
Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, Pfizer, and Zoetis. The Motley Fool recommends Johnson & Johnson and Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.
