There’s a bloodbath going on out there. Last week, the S&P 500 slid another 1.6%. The benchmark index, which includes the top publicly listed stocks traded on US marketplaces, is now down a staggering 24.8% since the end of 2021.
With stock prices plummeting everywhere, investors searching for stocks to purchase are especially interested in those that can provide consistent streams of passive income. There are several possibilities, but not all can be expected to make and consistently increase their dividends year after year.
For a long time, these three two healthcare behemoths have been making and increasing their payouts. Here’s why their finest days may still be ahead of them.
1. CVS Health
The vast CVS Health (CVS 1.52%) chain of retail pharmacies and medical clinics is well known to most of us. What you may not understand is that the pharmacies you see are only a small fraction of this healthcare conglomerate’s growing earnings.
CVS Health is an excellent dividend company to invest in since it controls the healthcare benefits that people obtain at its physical facilities. The corporation has long operated a pharmacy benefits management company, which today manages prescription coverage for an estimated 110 million plan participants. CVS Health merged with Aetna in 2018, a large health insurer that receives premiums from around 35 million Americans.
Being the end supplier of healthcare benefits that the firm is also paid to administer is an extremely profitable position to be in. CVS Health generated $5.4 billion in cash from operations in the second quarter alone, and profits are expected to climb as the firm expands its primary care offerings. CVS Health agreed to buy Signify Health and its countrywide network of over 10,000 providers for around $8 billion in cash in September.
CVS Health stock now yields 2.5% at current pricing. This isn’t exactly enticing, but it might skyrocket in the coming years. Over the last year, the firm only needed 17.5% of the free cash flow generated by its activities to pay its dividend commitment.
2. Abbott Laboratories
Abbott Laboratories (ABT 2.49%) is a healthcare corporation with a current yield of 1.9%. This isn’t the kind of dividend yield that gets investors excited right now, but it has the potential to grow significantly in the coming years.
Earlier this year, the temporary closure of a single Abbott facility in Michigan resulted in a countrywide infant formula scarcity. Aside from a nutrition business with no competition, the company promotes diagnostic devices, cardiovascular products, and a continuous glucose monitor (CGM) for diabetic patients, all of which are currently driving growth.
The FDA approved Abbott’s latest CGM gadget, the Freestyle Libre 3, in May. It’s significantly less obtrusive than similar Abbott or rival gadgets, measuring the size of two stacked pennies.
Diabetes affects an estimated 37 million Americans, or almost one in every ten. CGM devices that need to be changed every other week are typically acceptable to healthcare plan sponsors. This is because they are far less expensive than hospitalizations, which are required when patients’ blood glucose concentrations go outside of an acceptable range. With CGM expected to lead the market for the foreseeable future, Abbott appears to be a good company to purchase now and hold for the long term.