Do you want to retire a millionaire? Unless you’re one of the lucky few who can build a successful business or was born into wealthy relatives, the best path to that goal is likely decades of investing, allowing the power of compound growth to build your savings. for you. A diversified portfolio of high-quality stocks can work wonders if you give it enough time.
And what better place to find dominant companies with decades of growth potential than in healthcare? Healthcare isn’t going anywhere, and it’s already a multi-billion dollar industry in America. With that in mind, here are three of the best healthcare stocks to buy right now.
1. UnitedHealth Group
UnitedHealth Group (NYSE:UNH) is a huge conglomerate with two primary units. The UnitedHealthcare segment provides health insurance and benefits to tens of millions of people in the United States, and to more than 2 million in South America. The Optum segment provides healthcare and pharmacy services to more than 100 million people, and technology services to hospitals and other healthcare providers.
Over the past four quarters, the company generated more than $380 billion in revenue. Its size is a competitive advantage for UnitedHealth because it can provide more value for less money, which in turn helps it continue to gain market share. UnitedHealth is a behemoth with a market cap of more than $500 billion, but it continues to grow. Analysts believe UnitedHealth can grow earnings by an average of 13% annually over the long term. The company has also increased its dividend payments for fifteen years in a row. The stock is poised to continue delivering great returns, assuming the company stays out of antitrust trouble.
2.Abbott Labs
Healthcare products company Abbott Labs (NYSE: ABT) has evolved over the years. It spun off its primary pharmaceutical activities more than ten years ago AbbVie, but that hasn’t stopped the parent company’s shares from achieving market-beating returns. Today, Abbott Labs sells consumer health products, medical devices, testing equipment and generic drugs to emerging markets.
Abbott Labs is also a Dividend King with a 53-year payout streak, which investors looking for ever-increasing income from their portfolios should love. Currently, the country only spends about half of its income on dividends, so there should be plenty of room for future increases.
Most importantly, Abbott has positioned itself well for long-term growth. After the spin-off from AbbVie, the company joined the growth trends in cardiovascular and diabetes care. Analysts who follow the company, on average, believe that long-term earnings will grow 8% to 9% annually, and that the dividend will add almost 2% to investors’ returns. Abbott probably won’t deliver explosive profits, but years of steady returns in the 8% to 10% range from growth and dividends could add up to life-changing wealth.
3. Eli Lilly
Pharmaceutical giant Eli Lilly (NYSE: LLY) is perhaps the most explosive stock of these three. The company made a big splash with its GLP-1 receptor agonists Wegovy and Zepbound, which are prescribed for diabetes and weight loss, respectively. Combined sales of all GLP-1 drugs worldwide were about $40 billion last year, and some forecasters expect that to nearly quadruple to $150 billion annually by 2032. Eli Lilly is one of the few pharmaceutical companies with FDA-approved GLP-1 drugs. products. However, Eli Lilly is much more than that: it has a deep pipeline and a broad portfolio that includes numerous products with growing sales.
Analysts believe that Eli Lilly will achieve earnings growth of an average of 20% per year over the next three to five years. Long-term investors shouldn’t lose sleep over Eli Lilly’s dividend potential either. The company has increased its payouts for ten years in a row. Although it only yields 0.6% today, its payout ratio is only 31% of this year’s estimated earnings. Look for management to ramp up that payout as Eli Lilly experiences rapid growth in the coming years. That makes the stock a strong candidate for further market-losing total returns.
Should You Invest $1,000 in UnitedHealth Group Now?
Consider the following before purchasing shares in UnitedHealth Group:
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends AbbVie and Abbott Laboratories. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.
Do you want $1 million in retirement? 3 Stocks to Buy Now and Hold for Decades was originally published by The Motley Fool
