Medicine is the cornerstone of healthcare. That remains the case today, with the global pharmaceutical industry valued at $1.4 trillion and expected to grow at 6.1% per year until 2030. In light of this, it’s hard to see the sector going anywhere, meaning the companies that dominate the sector will remain great stocks for a long time to come. term investor can consider.
You don’t even need a lot of money to get started. Pfizer (NYSE:PFE) And Johnson & Johnson (NYSE: JNJ) are stalwarts in the sector with long track records, generous dividends and solid growth prospects. Moreover, their attractive valuations ensure that they buy on time.
If you have $200 (or more) available to invest in stocks, consider buying a share of each and holding them for the long term. This is why.
Pfizer’s rich history dates back to the mid-19th century. Although the company’s products have changed through innovation and mergers, it remains one of the leading pharmaceutical companies. Most recently, Pfizer was known for its COVID-19 vaccine (Comirnaty) and treatment (Paxlovid), which together generated $56.7 billion in sales at their peak in 2022. That business has largely dried up as COVID-19 cases surge has declined, and the resulting declines at both the top and bottom line levels have sent the stock to its lowest price level in a decade.
However, Pfizer is moving forward and reinventing itself, a key skill for any company looking to survive in the pharmaceutical industry. The company has determined its future growth on its oncology pipeline, which includes an influx of high-potential drugs following the $43 billion acquisition of Seagen in 2023. Sales and profits bottomed out and started growing again in 2024, paving the way for a nice future. Analysts expect Pfizer to grow profits at an average annual rate of 14% over the next three to five years.
Investors get a stake in Pfizer that has proven its ability to evolve to stay relevant. It also offers a dividend that yields 6.3% today, backed by a strong one payout ratio (57% of revenue). The stock could generate double-digit total investment returns well into the future, especially if the stock is valued at less than ten times forward earnings estimates.
Johnson & Johnson is another healthcare old-timer, dating back to the late 1800s. While it is essentially a pharmaceutical company, it is more diversified, with a vast MedTech segment that sells medical devices and other products. In August 2023, the company spun off its consumer products business Kenvue. Johnson & Johnson’s dividend is its claim to fame among investors. It is a Dividend King with 62 consecutive annual dividend increases.