3 Supercharged Dividend Stocks to Buy if There's a Stock Market Sell-Off

When there’s a market sell-off — like in recent times — it’s a good idea to have a few dividend stocks in your portfolio. Why? Because they’ll provide you with steady income even if the market continues to decline. And in better times, you’ll appreciate this recurrent income too.

Today, three healthcare players have shown they are committed to paying a dividend. And they’ve also shown they can beat the market in times of trouble. I’m talking about AbbVie (ABBV 0.43%), Johnson & Johnson (JNJ 0.71%), and Cardinal Health (CAH 0.91%). They’ve outperformed the S&P 500 so far this year. Let’s take a closer look at each.

1. AbbVie

AbbVie’s dividend payments have more than doubled over the past five years. Back in 2017, the annual dividend was $2.56. By the end of this year, the company will have paid investors $5.64 per share. AbbVie has lifted its dividend for the past 50 years, making it a Dividend King. These are S&P 500 companies that have raised their dividend for at least 50 consecutive years.

But you’ll want to own AbbVie for more than just its dividend. Revenue from the company’s neuroscience and aesthetics portfolios has been climbing in the double-digits. AbbVie sells popular products such as Botox for therapeutic uses like chronic migraine, and it sells Botox as well as the filler Juvederm for aesthetics uses. The neuroscience and aesthetics portfolios each generated more than $1 billion in revenue during the first quarter.

AbbVie is on its way to holding the biggest share of the prescription drug market by 2026, according to Evaluate Pharma. That’s a good reason to be optimistic about more revenue gains ahead — and the share price could easily follow.

2. Johnson & Johnson

Like AbbVie, J&J is also a Dividend King. This big pharma company has lifted its dividend for six consecutive decades. I like the idea of investing in stocks that have a track record of increasing dividends. If the company has held this sort of policy over time, it means lifting dividends is important to it. And that means it’s likely to continue along this path. J&J pays a $4.52 annual dividend. The yield is 2.63%, above the average for the pharmaceutical industry.

Another reason to like J&J is its long history of growing revenue and profit. The measures topped $93 billion and $20 billion, respectively, last year. J&J’s consumer health, pharmaceutical, and medtech businesses all grew in the most recent quarter. But the pharmaceutical business remains the biggest revenue driver. Pharma revenue climbed 12% in the quarter to more than $13 billion. That’s driven by cancer drug Darzalex, immunosuppressant Stelara, and psoriasis treatment Tremfya.

Considering J&J’s products today and the nearly 100 candidates in the pharmaceutical pipeline, the company has what it takes to keep generating major revenue over time.

3. Cardinal Health

Cardinal Health is a distributor of pharmaceutical products that also manufactures laboratory products and offers data solutions for healthcare professionals. The company is a Dividend Aristocrat, meaning it has increased its dividend for at least the past 25 years. Today, the company pays an annual dividend of $1.98. Its yield of 3.48% is above the average of the pharmaceutical industry.

Like the other companies I’ve mentioned, Cardinal Health is a good dividend stock because it promises recurrent income. But it also offers a track record of revenue growth. In the most recent quarter, Cardinal Health’s pharmaceuticals revenue climbed 17% to $41 billion.

Still, the company has been facing some challenges: a non-cash goodwill impairment charge in its medical segment, payments as part of a national opioid settlement, and inflationary pressures and supply chain problems. But here’s the good news: These look like temporary challenges. And Cardinal Health has the resources and revenue growth to handle them. The company has about $2 billion in cash and more than $30 billion in total current assets.

So, the long-term picture remains bright. For the long-term investor, an investment in Cardinal Health could pay off — in dividends and share price growth.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

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