In the investment world, finding stocks to hold for a lifetime is no easy task, considering that most companies cannot even survive for 20 years. However, two companies in the healthcare sector—Bristol Myers Squibb (BMY) and Medtronic (MDT)—appear to possess qualities that could enable them to excel over the long term. In addition to having robust core businesses, these two companies also offer highly attractive dividend programs.
Bristol Myers Squibb is a leading pharmaceutical company with a broad product portfolio spanning multiple therapeutic areas, and it has historically had a strong presence in the field of oncology. Last year, the company had 10 products with sales each exceeding $1 billion.
Although some of these drugs have lost patent protection and are facing declining sales, the company has a range of newer therapies in its growth portfolio that are expected to replace the older products. However, by the end of this decade, the company will face more patent expirations, including those for its two best-selling drugs—the anticoagulant Eliquis and the cancer drug Opdivo.
Bristol Myers Squibb is also a highly attractive dividend stock, with a forward dividend yield as high as 4%. Over the past decade, the company has increased its dividend payout by 65.8%. While the stock may seem somewhat “lackluster,” long-term shareholders can quietly accumulate substantial returns, especially if they choose to reinvest the dividends.
Medtronic is a leader in the medical device field. Its product portfolio covers multiple areas, in some of which the company has achieved significant breakthroughs or is a market leader. Its current product line includes the Pulse Field Ablation (PFA) series, a relatively new and innovative approach in which the company has played a pioneering role in treating certain heart conditions.
The company consistently delivers reliable revenue and earnings growth while routinely introducing newer products. One of Medtronic’s latest offerings is expected to be a significant long-term growth driver. Last year, its Hugo system, a robotic-assisted surgical device for urological procedures, received market authorization. Considering the currently low penetration rate of the robotic-assisted surgery market and Medtronic’s pursuit of new indications for the device, significant opportunities lie ahead.
This healthcare giant is also making important adjustments to its business. Medtronic is spinning off its diabetes care business into an independent company, a move that will help improve profit margins, as this unit’s operating margin is lower than that of its other businesses. This initiative will pay off in the long run.
Furthermore, Medtronic boasts an excellent dividend program: The company has increased its annual dividend payout for 48 consecutive years. This record strongly demonstrates Medtronic’s ability to withstand virtually any market condition and continue to perform relatively well long after. This makes it an excellent choice for investors seeking long-term income.
