In times of economic uncertainty, investors often turn to defensive assets. The healthcare sector is typically viewed as a defensive industry, but this does not mean that all healthcare stocks are worth holding during an economic downturn.
Diseases do not slow down because of a recession, yet not all healthcare segments are fully recession-resistant. During an economic slowdown or recession, non-essential medical expenditures—such as elective surgeries, preventive care, and more cosmetic medical procedures—take a back seat. Moreover, factors like the availability of generic drugs may lead consumers to opt for lower-cost alternatives to brand-name medications during difficult times.
Therefore, when selecting recession-resistant healthcare stocks, investors should focus on companies that possess wide economic moats and sticky revenues. Among medical device stocks, Becton, Dickinson and Company (BDX) stands out as a compelling example. Whether the economy is booming or in a slump, hospitals rely on this company’s medical supplies, laboratory equipment, and diagnostic products.
Over the past five years, BDX’s stock price performance has been less than ideal. The company has encountered several issues, including sluggish revenue growth, tariff threats, and a Class I recall (the most severe level) of its Alaris infusion system. Despite these challenges, the stock remains a no-brainer buying choice during market sell-offs, for three reasons.
First, BDX maintains a leading position in its niche segments and possesses an extremely solid foundational business. The company has built a strong brand reputation, with healthcare providers trusting its range of critical products, including syringes, needles, blood collection tubes, and more. Furthermore, because many of the products it sells are short-term (sometimes single-use) supplies that medical institutions need every day, this creates a large and recurring source of sales. Over 90% of the company’s revenue comes from recurring consumables.
Second, BDX has gradually taken steps to improve its business. The company has done so by spinning off certain business units, including the spin-off of its diabetes care business in 2022 and, more recently, the completion of the spin-off of its bioscience and diagnostic solutions segment in February. This will allow BDX to focus on its core medical technology business and reallocate capital to improve that business segment, which typically exhibits stronger sales growth.
Third, BDX’s stock price is attractive at current levels, but if the market fully collapses, its shares could become extremely cheap relative to its growth potential. The company’s forward price-to-earnings (P/E) ratio is 12.3 times, compared to the average of 16.8 times for healthcare stocks. Additionally, BDX is an excellent dividend stock, having increased its dividend payout for 54 consecutive years, even while facing challenges. This long-term record makes it a “Dividend King” (i.e., a company that has increased its dividend annually for at least 50 consecutive years). This means BDX deserves serious consideration, and its shares would be a great bargain during a market crash, especially for income-seeking investors.
Johnson & Johnson (JNJ) is another strong choice. Morningstar analyst Karen Anderson noted last year that JNJ possesses one of the widest moats in the healthcare sector, largely due to the moats of its medical technology and pharmaceutical divisions. JNJ is well-known for its popular consumer goods, including baby shampoo, Band-Aid bandages, and Tylenol pain relievers. However, through a stock split completed in May 2023, JNJ spun off its consumer health products business into Kenvue (KVUE), which agreed in November 2025 to be acquired by Kimberly-Clark for $48.7 billion.
Even after the spin-off, JNJ remains a true healthcare giant, manufacturing a wide range of medical devices that help doctors and other medical professionals perform life-saving procedures. JNJ also has a massive pharmaceutical business, producing drugs such as Remicade for arthritis, Zytiga for prostate cancer, and Stelara for psoriasis. JNJ has reorganized itself around its highly regarded pharmaceutical and medical device divisions, which have long-term growth prospects.
Both of the aforementioned healthcare companies have debt-to-equity ratios below 1. BDX and JNJ are both “Dividend Kings,” with records of 54 and 64 years of annual dividend increases, respectively. The “Dividend King” status of these two companies proves their ability to deliver steady growth during both prosperous and more challenging periods.
