Demand for healthcare services is not dependent on the peaks and troughs of a market, and thus, investing in the healthcare sector provides protection against market volatility. The sector is also suitable for investors looking for a steady cash flow because pharmaceutical companies are known to offer regular dividends.

Health spending in the United States is projected to grow at an average annual rate of 5.4% for 2019-2028 and to reach $6.2 trillion by 2028. While the industry faces labor shortages and recessionary pressures in the post-pandemic world marked by a European war, it would grow at a higher rate than the overall economy. Also, artificial intelligence is expected to revolutionize the sector in the areas of diagnosis, treatment, and monitoring of patients, eventually reducing costs and making the services more affordable.

Healthcare has seen growth in the ETF market in 2023. The S&P 500 Select Sector SPDR for Healthcare XLV grew 5.3% over the past year as of Jun 30, 2023. In the second quarter, the sector grew 2.9%, and in June itself, 4.3%. The sector may be off its pandemic period peak, but with government focus on healthcare, it will remain resilient and continue to grow in the coming years.

Our Choices

The stocks below flaunt a Zacks Rank #1 (Strong Buy) or Rank #2 (Buy). These companies declare dividends regularly. The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.

Patterson Companies, Inc. PDCO is a dental and animal health products company.

Patterson’s expected earnings growth rate for the current year is 3.3%. The Zacks Consensus Estimate for its current-year earnings has improved 6.8% over the past 60 days. This Zacks Rank #1 company has a dividend yield of 3.2% and a VGM Score of A.

Perrigo Company plc PRGO provides over-the-counter health and wellness solutions in the United States, Europe, Asia and Australia. The two segments it operates through are Consumer Self-Care Americas and Consumer Self-Care International.

Perrigo’s expected earnings growth rate for the current year is 24.6%. The Zacks Consensus Estimate for its current-year earnings has improved 0.4% over the past 60 days. This Zacks Rank #2 company has a dividend yield of 3.3% and a VGM Score of A.

GSK plc GSK is a pharmaceutical company that engages in the research, development and manufacture of vaccines and specialty medicines in the United Kingdom, the United States, and internationally. It is focused on therapeutic areas like infectious diseases, HIV, immunology and respiratory, and oncology.

GSK’s expected earnings growth rate for the current year is 6.1%. The Zacks Consensus Estimate for its current-year earnings has improved 1.1% over the past 60 days. This Zacks Rank #2 company has a dividend yield of 4% and a VGM Score of B.

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