As the number of grey-haired people rises worldwide, investors need to notice the strong-buy healthcare stocks. The need for healthcare will grow as the number of people aged 60 years and older doubles by 2050, a situation never before witnessed in the world, thanks to smaller families and longer lifespans. All of this is great for strong buy healthcare stocks as they can target a huge addressable market.

U.S. healthcare spending is estimated to reach a total market value of about $6.2 trillion by the end of 2028; however, this is only one S&P estimate. A different market forecast from Verified Market Research is even more aggressive, with a $21 trillion market size expected by 2030.

Altogether, the advancements in medical science, a growing share of the elderly, and a market segment of boomers with significant wealth make strong buy healthcare stocks a must-have in an ever-increasing market.

With a 14-year consecutive streak, the first pick we explore is on the cusp of achieving Dividend Aristocrat status. The second one is a Dividend Aristocrat with 52 straight dividend increases under its belt. Lastly, we will explore a company that uses generative AI in medicine.

UnitedHealth Group (UNH)

UnitedHealth Group (NYSE:UNH), the biggest U.S. healthcare company per revenue, is slowly returning to Dividend Aristocrat status. It has a 14-year streak of raising its dividends, making it a quality pick for those seeking strong buy healthcare stocks.

With all four quarter results for 2023 beating analyst predictions, it’s coming off a stellar year. Such performance will help it build on its already impressive dividend credentials.

Operating earnings increased 14.2% to $16.4 billion for FY’23, while UnitedHealthcare’s revenues swelled 12.7% to $281.4 billion. During the year, the number of patients serviced via value-based contracts increased by approximately 900,000, reaching over 4.1 million in 2023.

However, despite better-than-anticipated Q4 earnings, UnitedHealth disclosed a substantial 16% increase in medical expenses, thanks to increasing claims from its Medicare Advantage segment. This was partially due to COVID-19 claims at the end of the year and an increase in elderly patients obtaining outpatient cardiac and orthopedic care.

Despite legal issues related to an antitrust investigation by the U.S. Department of Justice, UnitedHealth remains optimistic about FY’24. Financial targets have not changed, which will likely relax investors.

Analysts have rated UNH as a “Strong Buy,” with 15 recommending a “Buy.” UNH has a mean price target of $591, implying a 20% potential gain.

Abbott Laboratories (ABT)

Abbott Laboratories (NYSE:ABT) is up 15% on a six-month basis. It boasts a significant market valuation and has increased its dividend for over 52 years, making it one to watch among strong buy healthcare stocks.

It now belongs to the elite group of Dividend Aristocrats, which attracts investors looking for a reliable source of income. The payout ratio is nearly 62%, which leaves room for growth.

Significant financial achievements throughout the last year have strengthened its position as one of the top strong-buy healthcare stocks. Notably, increases in the established medicines area (almost 9% in the quarter) and the nutrition segment (14% in Q4) helped boost returns and position it well in the medical device industry.

Abbott’s financials have grown significantly due to the company’s strategy after the global pandemic. Abbott increased their R&D spending during the height of the demand for COVID testing, creating over 25 new growth prospects.

The trend of innovation continues post-pandemic; Abbott has introduced the Assert-IQ Insertable Heart Monitor, a gadget that enables long-term monitoring of irregular heart rhythms, after receiving FDA approval. In addition, the FDA Advisory Committee also gave Abbott’s TriClip System a positive vote for treating leaky tricuspid heart valves.

Abbott also announced PROTALITY, a new weight-loss brand for adults and the world’s smallest rechargeable system for treating movement disorders with remote programming capabilities.

The consensus on Abbott Labs points to a ‘Strong Buy,’ with a 12% potential upside from the current price.

Merck & Co. (MRK)

Merck & Co. (NYSE:MRK), with a year-to-date return of 16%, rounds off this list of strong buy healthcare stocks.

Merck’s proactive strategy to sustain growth includes significant acquisitions, such as the purchase of Prometheus Biosciences and Acceleron Pharma, expanding Merck’s offerings in treating immunology and cardiovascular disease.

In addition, Merck introduced the first-ever AI system to combine drug research and synthesis under the name AIDDISON in December. This platform employs generative AI to look at over 60 billion possibilities for drug discovery.

The lynchpin of Merck’s success is Keytruda, though. It is a commercial success and is expected to generate $33 billion in sales. Some analysts decry the overreliance on this medicine for revenues. Nevertheless, considering several strategic acquisitions, the issue of diversification is also solving itself.

Merck, for example, is boosting its cancer pipeline by acquiring Harpoon, which specializes in cutting-edge T-cell engagers.

Besides a robust drug pipeline, Merck has increased its dividends for 14 consecutive years. The yield of 2.4% compares favorably to the sector median of 1.5%.

Analysts predict Merck’s growth rate for fiscal year 2024 will soar by approximately 468%. The stock holds a ‘Strong Buy’ consensus for Merck & Company, seeing a modest 2.55% upside potential to the last closing price of $131.95.

On the publication date, Faizan Farooque did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.