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There's no better time than now to invest in dividend stocks. And some of the best dividend stocks that beat the S&P 500's average yield of 2% can be found in the healthcare sector.
Global dividends fell by 12.2% in 2020 after the pandemic forced businesses and corporations to make a total of $220 billion in dividend cuts between the second and fourth quarters of 2020. Since then, dividend payments jumped 26% to $471.7 billion. And dividends paid to investors are expected to pay out $1.39 trillion by the end of the year.
We only have to look at one sector to find the best combination of yields and strong balance sheets.
With the delta variant infection rates continual climb to the return of state-specific mask mandates and the CDC's announcement for COVID-19 vaccine booster shots, the healthcare sector stands to benefit the most. In fact, many healthcare stocks saw a climb in their dividend yields during the pandemic while stocks in other sectors had to make cuts.
Should another COVID-19-induced shutdown happen as we move into the fall and winter months, when major spikes occurred in 2020, pharmaceutical companies will come out the other side relatively unscathed.
So, here are the five best dividend stocks to buy today.
Best Dividend Stocks, No. 5: GlaxoSmithKline Plc.
Not only is GlaxoSmithKline Plc. (NYSE: GSK) the cheapest of the bunch at $41.88 per share, but it's also the dividend stock with the highest yield at 5.22%.
The British multinational company is involved in a few different areas of healthcare: pharmaceutical, vaccines, and consumer health products. By the end of 2020, nearly half of all sales came from the pharmaceuticals branch, earning over $44 billion in sales.
While GSK works with a number of major companies in the development of COVID-19 vaccination in circulation worldwide, it's not nearly as popular as other pharmaceuticals since the company was late to arrive on the scene.
GSK recently underperformed compared to other pharmaceutical companies, but that's nothing to shy away from. That drop in the share price raised the dividend yield to what it is today. And with solid second-quarter results, the company is profitable with quarterly year-over-year revenue growth up 6.10%.
GSK also plans to spin off its consumer healthcare division - which comprises brands targeting oral health, pain relief, cold, flu and allergy, digestive health and vitamins, and minerals and supplements - as separate company by mid-2022.
That frees up $11 billion in free cash flow for the company, which means safety for its dividend.
Best Dividend Stocks, No. 4: AbbVie Inc.
AbbVie Inc. (NYSE: ABBV) is one of the best dividend stocks. And it has the benefit of longevity to thank for that.
Although this biopharmaceutical company is relatively young - founded in 2013 - compared to others, its parent company, Abbot Labs, has been around since the late 1800s. That experience has led ABBV to deliver dividend increased for the last five years.
Those continual increases go a long way to show that the company appreciates shareholders and wants to reward them via dividend payments. The pandemic caused its dividend yield to drop slightly because of the increase in share price, but the company still sports a strong yield of 4.43%. That's still much higher than the S&P 500 average of 2%.
One of the best things about ABBV is that the company has been steadily growing through acquisitions. Earlier in 2021, ABBV agreed to acquire the biotech company Mitokinin.
Mitokinin developed technology to increase the activity of the Pink1 compound that's heavily liked to Parkinson's disease. By increasing activity of Pink1, overall brain activity and synaptic functions increase. This results in lower risk for developing diseases like Parkinson's.
The Parkinson's disease market is expected to reach $5.69 billion by 2022, which could further drive ABBV's growth.
Its total revenue in 2018 was roughly $32 billion. That number climbed higher, accelerated by the pandemic in 2020, when it hit over $45 billion. And by the end of June 2021, revenue for the past 12 months was $53.73 billion - an increase of 48.31%. And the company has a current profit margin of 12.4% to boot.
Best Dividend Stocks, No. 3: Pfizer
Pfizer Inc. (NYSE: PFE) is one of the most popular stocks this year, landing itself at the No. 16 spot on Robinhood's top 100 stock list. And it's one of the most talked about in the news as well considering that it's one of the three major players when it comes to effective COVID-19 vaccines.
The company's COVID-19 vaccine bagged $33.5 billion in sales this year alone. Its partner, BioNTech, a German biotech company, received half of the profits. The Pfizer vaccine is the biggest-selling drug in the world.
With the CDC's announcement for same-vaccine booster shots, Pfizer will be getting another windfall of cash this fall. The FDA gave full approval of its COVID-19 vaccine, which allows it to market the drug and prescribe it for off-label use.
Pfizer offers a very solid dividend yield of 3.16% compared to the S&P 500's average yield of 2%.
Overall, Pfizer is in great shape.
The company has a profit margin of 23.8% and has seen quarterly revenue growth of an impressive 92.4%, making Pfizer one of the most profitable companies on this list. Revenue for the past year has been 55.52 billion. And the company has a market cap of $278 billion.
But the best part about Pfizer? The company has been reliable with its dividend payments, managing a streak of 330 consecutive quarterly payouts to shareholders.
Best Dividend Stocks, No. 2: AstraZeneca Plc.
AstraZeneca Plc. (NASDAQ: AZN) is a Swedish-British biotechnology company is known for assisting with the development of a COVID-19 vaccine. But it also produces products that deal with cardiovascular issues, oncology, infection, respiratory health, and neuroscience.
But it's the company's oncology drugs, Tagrisso, Imfinzi, and Lynzparza, that have led it to sustainable double-digit sales growth. Improved diagnostic screening, strong pricing power, and in some instances, longer duration, all benefit cancer drugs.
AstraZeneca also has Farxiga, a type 2 diabetes drug. Farxiga handed the company 60% sales growth in the first half of 2021. It's currently at about $2.7 billion in run-rate sales for the year.
And AstraZeneca closed its $39 billion acquisition of rare-disease drug developer Alexion Pharmaceuticals last month. It's a move into a market that has little to no competition.
The company offers a good dividend yield of 2.36% and has paid out dividends for the past five years without fail. That's good news for current shareholders. It's even better news for future investors. Consistent dividend payments show that the company wants to pay those dividends rather than try to buy back shares to mitigate payouts.
While the dividend yield isn't as high as others, AstraZeneca has the value and revenue with a sustainable double-digit growth rate of 31% year over year that's become a high-growth opportunity.
Best Dividend Stocks, No. 1: Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) is one of the largest pharmaceutical companies in the world that sports a wide variety of products for people of all ages. It's one of the most popular stocks with a dividend - and a stock that is part of an elite group of S&P 500 stocks that have increased dividends for at least 50 consecutive years.
Johnson & Johnson isn't just a Dividend Aristocrat; it's a Dividend King. The company has raised dividends for 59 years in a row, and it currently offers a dividend yield of 2.39%.
Those consecutive increases are due in part to Johnson & Johnson's stability. And that wide range of products helps to maintain said stability. The company is a leader in consumer health, medical devices, and pharmaceuticals. Twenty-eight products generated more than $1 billion in sales last year, and about 70% of its total revenue comes from products that are either No. 1 or No. 2 when it comes to global market share.
Johnson & Johnson was also the first to develop a one-shot vaccination for COVID-19, which earned it $5 billion in a single year on the vaccine alone.
While Johnson & Johnson might be dealing with some current legal issues, as well as competition for Remicade, the its former top-selling drug, the company has survived plenty of more difficult times over the last 135 years.
Year over year, the company continues to deliver solid growth at 27.1%. Johnson and Johnson earned $89 billion in revenue over the past years and has a good profit margin at 19.92%. There aren't many dividend stocks better than Johnson & Johnson.
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