Being a long-term investor brings a unique peace of mind. It requires thinking in decades, not months or years, which allows an investor to focus on owning exceptional businesses.
The best companies will pay you to own them, sharing their profits via dividends. These high-quality stocks continuously grow, maintain an edge over competitors, and make more money than the business needs. Want a long-term winner and decades of passive income? Look for companies that increase their dividend every year.
The healthcare industry is a great place to look for these stocks because people worldwide always need care and medicine.
1. Eli Lilly
The global pharmaceutical industry alone is worth nearly $1.5 trillion (and growing). Eli Lilly (LLY -6.59%) is among the leaders in the field, with a drug portfolio treating conditions across obesity, diabetes, neuroscience, immunology, and oncology. The company is perhaps most known today as one of the leaders in GLP-1 agonists, which treat diabetes (Mounjaro) and obesity (Zepbound) by slowing digestion and suppressing patient appetite. It's a tremendous growth market, valued at approximately $25 billion in 2024 and poised to grow to $55 billion by 2031.
Management anticipates companywide sales of $58 billion to $61 billion in 2025 (32% growth), and analysts estimate Eli Lilly's earnings will grow by an average of 38% annually over the long term. Management invests between $6 billion and $12 billion annually into research and development, which should keep the company's product pipeline stocked with future growth opportunities. The stock's dividend yield is 0.6% today. However, the dividend payout ratio is only a quarter of the company's (rapidly growing) earnings, so investors should expect years of outsized dividend increases that can snowball into significant income over time.
2. Zoetis
Animal care is an overlooked niche within the healthcare industry that Zoetis (ZTS -1.15%) dominates. Zoetis is a global leader in vaccines, medicines, diagnostics, and other technologies for companion animals and livestock. The company enjoys growth tailwinds from two primary trends: the growing demand for animal protein and rising spending on companion animals (especially among younger generations). Zoetis has a decades-long operating history as part of Pfizer and has grown revenue at an 8% annualized rate since its 2013 IPO.
Zoetis is another dividend stock that won't wow you with immediate income (1% yield) but has tremendous growth potential. Since going public, management has increased the dividend yearly, and the payout ratio is still just 26% of earnings. Analysts expect 8% to 9% annualized earnings growth over the long term, so investors could reasonably expect many years of double-digit year-over-year pay raises ahead.
3. Kenvue
Looking for a higher dividend yield? Kenvue (KVUE 0.29%) has you covered. You probably know over-the-counter health products like Tylenol, Motrin, Aveeno, Neutrogena, Band-Aid, Benadryl, and more. Kenvue went public in 2023 after parent company Johnson & Johnson spun off its consumer products business. With Kenvue, investors are getting arguably the most dependable part of Johnson & Johnson's business, a Dividend King known for its long-term consistency and excellence.
Kenvue isn't growing as quickly as Eli Lilly or Zoetis, but it offers investors a strong starting point for dividend income. The stock yields 3.9% at its current share price, with a well-padded 66% earnings-based payout ratio. Analysts believe Kenvue will grow earnings by an average of roughly 5% annually over the long term. The stock's world-class brands should continue generating stable profits that fuel steady annual dividend increases well into the future, just as its former parent company did before.
