If you aspire to retire as a millionaire, the most viable path for the majority of individuals involves long-term investing to benefit from the power of compound growth. A well-diversified portfolio of top-quality stocks, particularly in the healthcare sector, can pave the way for achieving this financial goal. Here are three top healthcare stocks that are currently worth considering.
1. UnitedHealth Group (NYSE: UNH)
UnitedHealth Group is a massive conglomerate with two primary units. Its UnitedHealthcare segment offers health insurance and benefits to millions in the U.S. and South America, while its Optum segment provides healthcare and pharmacy services to a vast number of individuals, along with technology services to healthcare providers. With over $380 billion in revenue generated in the past four quarters, UnitedHealth Group’s size serves as a competitive advantage, enabling it to provide more value at a lower cost and continue capturing market share. Analysts project an average annual earnings growth rate of 13% for the company in the long term. Additionally, UnitedHealth has a market cap exceeding $500 billion and has consistently increased its dividend payouts for 15 years.
2. Abbott Labs (NYSE: ABT)
Abbott Labs, a healthcare products company, has transformed over the years, spinning off its primary pharmaceutical business into AbbVie. Despite this move, Abbott Labs has continued to deliver impressive returns to investors. The company now focuses on selling consumer health products, medical devices, testing equipment, and generic pharmaceuticals in emerging markets. Abbott Labs is a Dividend King, having increased its dividend for 53 consecutive years. With a payout ratio of about half its earnings, the company has ample room for future dividend hikes. Analysts anticipate earnings growth of 8% to 9% annually in the long term, with the added benefit of a nearly 2% dividend yield.
3. Eli Lilly (NYSE: LLY)
Eli Lilly, a pharmaceutical giant, stands out for its recent success with GLP-1 receptor agonist drugs Wegovy and Zepbound, prescribed for diabetes and weight loss. The combined sales of GLP-1 drugs globally reached approximately $40 billion last year, with forecasts suggesting a quadrupling to $150 billion annually by 2032. Eli Lilly is one of the few pharmaceutical companies with FDA-approved GLP-1 products and boasts a diversified portfolio with numerous products experiencing growing sales. Analysts project a 20% average annual earnings growth rate for Eli Lilly over the next three to five years. Additionally, the company has raised its dividend for 10 consecutive years, with a current yield of 0.6% and a payout ratio of 31% of this year’s estimated earnings.
Overall, these healthcare stocks present compelling opportunities for long-term investors seeking to build wealth through a combination of growth and dividends. Investing in such established and innovative companies can potentially lead to significant returns over time.