Investing

One Sector Has Underperformed Massively: These 4 Blue-Chip Dividend Giants Are Huge 2025 Plays

Lee Jackson

Published: November 25, 2024 11:46 am

Key Points

• Donald Trump’s victory is positive for the stock market.
• The healthcare sector has underperformed and offers enormous upside.
• Healthcare stocks pay some of the most reliable dividends.
• Proper asset allocation should include stocks from many sectors; a financial advisor can help with that. Click here to learn more about finding one.

Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.

A study from Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past half-century (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).

While the massive surge of artificial intelligence and mega-cap technology stocks over the past two years has driven the stock market to record highs, one sector that has always been a favorite of growth and income investors has languished and underperformed the S&P 500 by a stunning 21 points. History shows us that when this happens, the healthcare sector has outperformed in a big way at some point over the next year.

We decided to screen the top healthcare companies in our 24/7 Wall St. research database, looking for stocks that pay big and dependable dividends and have room to move substantially higher in 2025. Four companies look like outstanding ideas now, and all are Buy-rated by some of the top firms on Wall Street.

Why do we cover dividend stocks?

Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

AbbVie

This stock is one of the top pharmaceutical stock picks across Wall Street and pays a dependable 3.83% dividend. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories.

The company develops and markets drugs in areas such as:

• Immunology
• Virology
• Renal disease
• Dyslipidemia
• Neuroscience

One of the biggest concerns with AbbVie is what might eventually happen with the anti-inflammatory therapy Humira, which has some of the most significant sales for a drug ever recorded.

The company was concerned, so five years ago, it paid $63 billion to rival drugmaker Allergan. That was one of the most significant mergers in an industry where some of the biggest companies have been willing to pay a high price to resolve questions about their future growth.

AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market. Allergan has been grappling with this problem as more alternatives to Botox emerge.

Bristol-Myers Squibb

This top company remains a solid pharmaceutical stock to own long-term, offering an outstanding entry point and a massive 4.30% dividend. Bristol-Myers Squibb Co. (NYSE: BMY) discovers, develops, licenses, manufactures, and markets pharmaceutical products worldwide.

The company offers products in:

• Hematology
• Oncology
• Cardiovascular
• Immunology therapeutic classes

Bristol-Myers Squibb products include:

• Revlimid, an oral immunomodulatory drug for the treatment of multiple myeloma
• Opdivo for anti-cancer indications
• Eliquis, an oral inhibitor indicated for the reduction in risk of stroke/systemic embolism in NVAF and for the treatment of DVT/PE
  Orencia for adult patients with active RA and psoriatic arthritis, as well as reducing signs and symptoms in pediatric patients with active polyarticular juvenile idiopathic arthritis

The company also provides:

• Sprycel for the treatment of patients with unresectable or metastatic melanoma
• Abraxane, a protein-bound chemotherapy product
• Implicit for the treatment of multiple myeloma
• Reblozyl for the treatment of anemia in adult patients with beta-thalasso

Johnson & Johnson

With a diverse product base and a trendy and solid brand, Johnson & Johnson (NYSE: JNJ) is among the most conservative big pharmaceutical plays and pays a solid 3.15% dividend. The company researches, develops, manufactures, and sells various products in the healthcare field worldwide.

The company’s Innovative Medicine segment offers products for various therapeutic areas, such as:

• Immunology, including rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis
• Infectious diseases, including HIV/AIDS
• Neuroscience, consisting of mood disorders, neurodegenerative disorders, and schizophrenia
• Oncology, such as prostate cancer, hematologic malignancies, lung cancer, and bladder cancer
  Cardiovascular and metabolism, including thrombosis, diabetes, and macular degeneration
• Pulmonary hypertension comprising pulmonary arterial hypertension

Its MedTech segment provides Interventional Solutions, including:

• Electrophysiology products to treat heart rhythm disorders
• The heart recovery portfolio, which includes technologies to treat severe coronary artery disease requiring high-risk PCI or AMI cardiogenic shock
• Neurovascular care that treats hemorrhagic and ischemic stroke

This segment also offers:

• An orthopedics portfolio that includes products and enabling technologies that support hips, knees, trauma, spine, sports, and other
• Surgery portfolios comprised of advanced and general surgery technologies, as well as solutions for breast aesthetics and ear, nose, and throat procedures
• Contact lenses under the Acuvue brand and Tecnis intraocular lenses for cataract surgery.

Pfizer

This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been beaten down over the past few years as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a hefty 6% dividend, which has risen yearly for the past 14 years.

The company offers medicines and vaccines in various therapeutic areas, including:

• Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
• Biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena, and Braftovi brands
• Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga, and Paxlovid brands.

Pfizer also provides medicines and vaccines in various therapeutic areas, such as:

• Pneumococcal disease, meningococcal disease, tick-borne encephalitis
• COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba, and the Prevnar family brands
• Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis, and Cibinqo brands
  Amyloidosis, hemophilia, and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX, and Genotropin brands

Trading not far from its lowest split-adjusted level in 13 years, the stock is an incredible bargain at current levels and pays a massive dividend.

The pharmaceutical giant reported third-quarter 2024 revenues of $17.7 billion, representing 32% year-over-year operational growth. Earlier this year, the company raised full-year 2024 revenue guidance to $59.5 to $62.5 billion and lifted adjusted diluted EPS guidance to $2.45 to $2.65. Patient investors will receive one of the highest blue-chip dividends, and shares trade at a reasonable 9.88 times estimated 2025 earnings.

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