Investing in pharmaceutical stocks can be a wise choice for those looking to build long-term wealth. Regardless of economic conditions, people will always need medications, which creates a reliable revenue stream for these companies. If you’re considering an investment of $500, here are three pharmaceutical stocks worth your attention.
Abbott Laboratories (NYSE: ABT) stands out for its diverse portfolio that includes not just pharmaceuticals but also medical devices, diagnostics, and nutrition. This variety allows Abbott to thrive even when one segment encounters challenges. For example, while the diagnostics division may face revenue dips due to declining coronavirus testing, the medical devices sector is currently experiencing double-digit growth. Abbott’s ongoing commitment to innovation is evident, with a strong track record of product approvals and returns on investment. Notably, Abbott has been recognized as one of the most profitable healthcare stocks, with historical returns that have astounded investors. Its status as a Dividend King—having increased its dividend payout for over 50 consecutive years—further solidifies its appeal to income-focused investors. Recently, the company announced a new $7 billion share repurchase plan, underscoring its confidence in future growth.
Another attractive stock is Pfizer (NYSE: PFE), which has seen its price stabilize after a challenging period marked by declines in coronavirus vaccine sales. Currently, Pfizer is valued at a bargain-forward earnings ratio of just 11, making it an opportune time to invest. The company has begun pivoting from a dependence on pandemic-driven products, focusing instead on a robust pipeline of innovative therapies, particularly in oncology. Management anticipates that these new treatments could generate an additional $20 billion in revenue by 2030. While not classified as a Dividend King, Pfizer does offer a competitive dividend yield of 5.6%, promising dividends that could grow over time.
Lastly, Johnson & Johnson (NYSE: JNJ) recently optimized its business focus by spinning off its consumer health division as Kenvue, allowing it to concentrate on more profitable areas such as pharmaceuticals and medical technology. This strategy appears to be paying off; J&J reported impressive sales growth in its innovative medicines and medical tech divisions, aided by strong consumer demand. With a solid financial backbone, including impressive free cash flow, J&J maintains its status as a Dividend King, positioning itself as a reliable investment for both income and capital appreciation.
These three pharmaceutical giants—Abbott Laboratories, Pfizer, and Johnson & Johnson—are excellent choices for those looking to invest $500 in stocks with the potential for ongoing returns and growth in the healthcare sector. By focusing on well-established companies with a history of strong performance, you can make informed decisions that may yield profitable outcomes in the years ahead.