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The healthcare industry continues to offer attractive opportunities for generating passive income due to its resilience during economic downturns and constant demand for innovative technologies and treatments. Three companies in particular stand out as potential dividend goldmines: Novo Nordisk, Eli Lilly, and AbbVie.
Novo Nordisk has a long-standing reputation in diabetes treatment, having commercialized insulin as early as the 1920s. Its recent breakthroughs in weight management through GLP-1 drugs such as Ozempic and Wegovy have propelled its growth to unprecedented levels. With an estimated 69% overweight/obese population in the US alone, Novo Nordisk’s market size presents ample opportunities for further expansion. The company’s dividend is currently around half of its earnings, offering a substantial growth potential given analyst predictions of 18% annual earnings expansion.
Eli Lilly, a pharmaceutical conglomerate, has been rebuilding its dividend track record, having maintained the same dividend level following the financial crisis in 2008-2009 for over ten years now. Despite being less diversified than Novo Nordisk, Eli Lilly’s products range from Alzheimer’s to cancer therapies, providing a well-rounded portfolio. The approval of Mounjaro, Eli Lilly’s GLP-1 competitor to Ozempic, further reinforces its position in the weight management sector. Eli Lilly’s impressive projected earnings growth rate of 36% annually over the next three to five years promises large dividend hikes for shareholders.
AbbVie’s former flagship drug, Humira, has faced generic competition, but the company has demonstrated its prowess beyond this single product. AbbVie’s new offerings, Skyrizi and Rinvoq, have generated combined sales of $12 billion thus far in 2022. AbbVie also acquired Botox manufacturer Allergan for an astounding $63 billion in 2020, bolstering its product range. Analysts forecast a steady 7% annual earnings growth rate for AbbVie over the long term, coupled with a generous 3.8% dividend yield.
Investors must bear in mind that The Motley Fool Stock Advisor analyst team recently chose a different set of ten stocks to invest in, none of which include Novo Nordisk. However, Stock Advisor has delivered exceptional returns, exceeding those of the S&P 500 since 2002. By subscribing to Stock Advisor, investors gain access to a comprehensive strategy for investing and regular updates from analysts, as well as receiving two fresh stock recommendations every month. Some of its previous selections have included Nvidia, which generated a staggering $543,758 return for investors who followed its advice in 2005.
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