Picking the best healthcare stocks to buy now is deceptively simple. These investments marry the recession-proof nature of the healthcare industry with big growth thanks to demographic changes.
After all, as America’s population continues to skew older thanks to aging Baby Boomers, the right healthcare stocks will have plenty of new “customers.” And since healthcare extends lives and reduces pain, you can be sure these “customers” will keep spending money.
Three specific healthcare stocks I like right now include:
- Ventas, Inc. (NYSE:VTR), a senior housing REIT
- Johnson & Johnson (NYSE:JNJ), a consumer health giant
- Gilead Sciences, Inc. (NASDAQ:GILD) a biotech stock with a strong track record of outperformance.
All of these companies are positioned to harness the growth potential of their sector.
Here’s more detail on why each of these is among the best healthcare stocks to buy now.
Best Healthcare Stocks to Buy: Ventas
Dividend Yield: 4.6%
Ventas is a REIT that is capitalizing on the graying of America and is one of the largest operators of senior-living facilities in the U.S.
VTR owns approximately 1,300 properties, ranging from skilled nursing facilities to specialty hospitals.
Almost half of Ventas properties operate under the lucrative “triple net lease” model where tenants are responsible for paying real estate taxes, building insurance and maintenance. That’s a streamlined and cost-effective deal for the operator, and VTR investors have been paid back nicely via a 4.6% dividend fueled by these properties.
As baby boomers age and rely on facilities from companies like Ventas to keep them healthy and active, there will only be increased demand for these kinds of services in the coming years.
Best Healthcare Stocks to Buy: Johnson & Johnson
Dividend Yield: 2.8%
Johnson & Johnson is the perfect example of a bedrock stock.
With powerful consumer brands like Tylenol and Band-Aid, this company is a mainstay of American households. And with these staples alongside higher-margin medical products that will remain recession-proof, JNJ is as stable as they come.
Americans will cut back on a lot in hard times, but they will never cut back on the items that reduce their pain and improve their quality of life.
The 2.8% dividend at Johnson & Johnson is better than Treasuries and almost as reliable.
Distributions have been paid since World War II, and JNJ stock remains one of just two public companies with AAA-rated debt (if you’re curious, Microsoft Corporation (NASDAQ:MSFT) is the other).
Best Healthcare Stocks to Buy: Gilead Sciences
Dividend Yield: 2.5%
Gilead Sciences has been one of the best biotech stocks on Wall Street, soaring 263% in the last five years even as the S&P 500 has only increased about 70% in the same period.
Equally impressive is that revenue has exploded from $9.7 billion in fiscal 2012 to what will be a projected $30 billion at the end of this fiscal year.
Alongside that big growth in the top line has been serious profitability that has prompted GILD to start paying dividends in 2015. After a recent increase, the company already yields 2.5% in annual payouts, giving it a great combination of income potential and growth in its next-generation biopharmaceutical treatments.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
