The healthcare industry is home to many leading companies. Few are more famous or recognizable than Eli Lilly (NYSE: LLY) And Johnson & Johnson (NYSE: JNJ)both of which are among the largest companies in the industry. These two leaders have been at it for decades, delivering significant innovations, publishing consistent financials and rewarding long-term shareholders.
However, it is not too late to invest in Eli Lilly or Johnson & Johnson: these companies still have a lot to offer. Let’s find out more.
1. Eli Lilly
Eli Lilly has been making waves lately for its work in the diabetes and obesity care markets. Its latest approvals in this space, Mounjaro for diabetes and Zepbound for weight loss, promise to be some of the world’s best-selling drugs. Mounjaro’s sales topped $5 billion last year — its first full year on the market. Zepbound has been flying off the shelves since its approval in November.
And Eli Lilly has a number of other interesting programs in development in these areas.
The company’s insulin efsitora alfa is a once-weekly insulin product that’s currently in phase 3 testing. It could hit the market within the next two years if it clears remaining regulatory hurdles. In the weight-loss space, Eli Lilly is developing drugs like mazdutide and retatrutide; the latter could generate $5 billion in revenue by 2030, according to research firm Evaluate Pharma. So despite the many potential challengers in the weight-loss market, Eli Lilly still appears to be ahead of the curve.
It would be a mistake, however, to think that the company is only focused on diabetes and weight loss. Eli Lilly has made big moves elsewhere, including in Alzheimer’s disease (AD), one of the toughest areas to crack in decades. Lilly recently received approval for Kisunla, a therapy for early symptomatic AD. The pharmaceutical giant expects many more approvals and label expansions in the next five years.
Eli Lilly’s revenue and earnings should grow much faster than most comparable competitors in the pharmaceutical industry. And the company is a solid dividend stock. Lilly’s forward yield of 0.65% at recent prices may not be impressive — the average for the S&P 500 is 1.3% — but it has increased its payouts by just under 102% over the past five years. Whether it’s growth or income, Eli Lilly is a top pick this month for investors focused on the long term.
2. Johnson & Johnson
Johnson & Johnson has not performed well in recent years. The health care giant has faced several problems, including a recent law in the U.S. that allows Medicare to negotiate prices for certain drugs, which should result in less revenue for the companies that sell those drugs. Some of J&J’s products will be targeted.
Johnson & Johnson’s business, however, remains attractive to some investors. The company’s large and diversified portfolio of drugs and medical devices, its global footprint, and its extensive experience navigating the healthcare sector all offer the company significant advantages.
In its pharmaceuticals segment, J&J boasts more than 10 blockbuster drugs. The company can withstand disruptions in any of its business segments without suffering significant losses. It should also survive multiple patent cliffs — and, for that matter, Medicare’s pricing negotiations. Johnson & Johnson has the funds and experience to steer its drug development strategy away from this problem, having survived major changes in the health care regulatory landscape over the past 100 years.
In addition, Johnson & Johnson recently spun off its consumer health segment, which became a standalone company called Kenvue; this move should improve J&J’s top-line growth numbers. While the company won’t grow its earnings in line with growth stocks, you can expect stability and predictability in its financial results over the long term. It has a AAA rating from Standard & Poor’s — the highest available credit rating and a testament to the strength of its balance sheet — and for good reason.
Finally, Johnson & Johnson is an exceptional dividend stock: the company has increased its payouts for 62 consecutive years. The forward yield exceeds 3% at recent prices. J&J is a great blue chip dividend stock to buy this month.
Should You Invest $1,000 in Eli Lilly Now?
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Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool has positions in and recommends Kenvue. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.
2 Healthcare Stocks You Should Be Buying Massively in August was originally published by The Motley Fool
