6 Large-Cap Health Care Dividend Stocks Offer Positive One-Year Total Returns

To create a diversified portfolio, investors should analyze and incorporate many different investment categories, such as health care dividend stocks, incorporating diverse payout horizons and occasionally differing strategies, such as high-income distributions for extended time horizons versus short-term high capital growth.

However, careful analysis can occasionally reveal equities that meet multiple criteria, such as the list below of six large-cap health care dividend stocks that have been paying rising dividends for at least 10 years and offer positive total returns over the last 12 months.

Using the Dividend Screener available at DividendInvestor.com, I searched for equities with certain characteristics that would make them appealing to investors looking to check multiple categories with the same securities. The benefit of this strategy is that investors can simplify their investment portfolio and achieve investment goals with fewer individual equities. While professional investors and money managers have the expertise, knowledge and time to manage and continuously adjust complex portfolios, portfolio simplification is especially important to part-time investors who use their investment portfolio to build a retirement fund or to provide a secondary source of income.

Investing in index mutual funds or exchange-traded funds (ETFs) is another option for easy diversification, and all investors – professional or amateur – should certainly allocate a portion of their investment funds into those investment vehicles. However, all investment vehicles have their own benefits and disadvantages. Therefore, just like it is prudent to diversify into different sectors, it is also sensible to tap various investment vehicles.

Each of the different investment vehicles react differently to changes in economic and business environments. Therefore, the different vehicles offer various levels of returns, as well as protection against economic downturns, inflation, interest rate hikes, foreign currency fluctuations and more.

Different sectors of the economy will thrive and struggle depending on various factors. For instance, different companies within the Health Care sector will offer varying returns under the provisions of the Patient Protection and Affordable Care Act – commonly dubbed Obamacare – than they will if the legislature overturns some provisions of the act or the entire act. However, regardless of any federal regulation, all Health Care companies with a good business model and operational execution have a chance to thrive in the United States because of the country’s aging population that creates high demand for health care services.

The selection includes companies in the Health Care sector with a market capitalization of more than $10 billion that have raised their annual dividend for at least 10 consecutive years, as well as provided a positive combined dividend income and share-price growth total return in the past 12 months. The list ranks the six equities by their one-year total return from lowest to highest.

6 Large-Cap Health Care Dividend Stocks: #6

CVS Health Corporation (NYSE:CVS)

The CVS Health Corporation’s current 2.67% dividend yield is 40% higher than the company’s 1.9% five-year average. While the steady dividend payout growth over the five-year period contributed to the yield increase, the company’s share price decline in recent months boosted the yield. Despite the share price’s recent struggles, the company’s rising dividend managed to compensate enough to deliver a 2% total return over the past 12 months. While that might seem like a small return, it could signify a move in the right direction compared to a 22.8% total loss over the past three years. Investors should look for the next ex-dividend date in late September 2018.

6 Large-Cap Health Care Dividend Stocks: #5

Johnson & Johnson (NYSE:JNJ)

With 55 consecutive annual dividend hikes, Johnson & Johnson is one of the Dividend Aristocrats. The company’s current 2.7 yield is even with the company’s average yield over the past five years. Johnson & Johnson’s share price interrupted its decade-long uptrend and lost more than 25% in the first half of 2018. However, since late May 2018, the share price recovered more than half of those losses and continues to rise. Despite the share price pullback, the company managed to deliver a total return of 4.6% over the past 12 months. However, long-term total returns were significantly higher with 52% and 73% over the past three and five years, respectively. The company’s next ex-dividend date will occur in late November 2018.

6 Large-Cap Health Care Dividend Stocks: #4

3M Company (NYSE:MMM)

After advancing more than 450% between February 2009 and late January 2018, the company’s share price pulled back 22% and resumed its uptrend after its 52-week low at the beginning of May 2018. Even with the share price decline, the 3M Company – a Dividend Aristocrat with six decades of consecutive annual dividend hikes – rewarded its shareholders with a total return of more than 6% over the last year. However, the current share price uptrend could potentially lead this equity back towards total returns similar to the 55% total return over the past three years and 104% over the last five years. The company’s next ex-dividend date should occur in late November.

6 Large-Cap Health Care Dividend Stocks: #3

AmerisourceBergen Corporation (NYSE:ABC)

After decades of relatively steady asset appreciation, the company’s share price dropped more than 50% in 2015 and 2016 and has been trading with increased volatility since then. However, through the amplified volatility, the share price managed to ascend 20% since October 2016. This share-price uptrend combined with the rising dividend to reward shareholders with a 15% total return over the last year to spark a significant reversal from a 7.6% total loss over the past three years. The five-year total return was more than 67%. The company hiked its annual dividend for the past 14 consecutive years, with the average annual growth rate of nearly 10% over those past three years. The company’s next ex-dividend date should occur in mid-September, with an early-December pay date.

6 Large-Cap Health Care Dividend Stocks: #2

Medtronic PLC (NYSE:MDT)

Medtronic ’s 40 consecutive years of annual dividend boosts, an average dividend growth rate of more than 21% over the past three years and a 23.3% one-year total return were enough to place the company high on this list, but slightly short of the top spot. In addition to the strong one-year total return. The company’s share price advancement of more than 20% over the past 12 months and 62% over the past five years contributed to the rising dividend income to deliver a 38% three-year total return and a 102% total return over the past five years. The company has set its next ex-dividend date for September 27, 2018 with an October 19, pay date.

6 Large-Cap Health Care Dividend Stocks: #1

Stryker Corporation (NYSE:SYK)

Stryker managed to outperform Medtronic by the slightest of margins and take the top spot with 19 years of consecutive annual dividend hikes, an average dividend growth rate of more than 11% over the past three years and a 23% total return over the past 12 months. With a virtual tie on the previous set of metrics, Stryker won because it also rewarded its shareholders with robust total returns of 75% and 166% over the past three and five years, respectively. Investors should expect a declaration of the next dividend any day with a late-September ex-dividend date and a pay date approximately one month later.

Most investors can easily choose exposure to health care stocks by investing in one of the index ETFs – such as the Health Care Select Sector SPDR Fund (NYSE:XLV) or the Vanguard Healthcare ETF (NYSE:VHT) – or mutual funds like the Fidelity Select Health Care Services Fund (NASDAQ:FSHCX) or the T. Rowe Price Health Sciences (NASDAQ:PRHSX). However, some investors will prefer to invest in individual stocks. While most individual stocks have higher risk exposure, they will offer higher return potential in most cases. Individual investors must weigh the pros and cons of each option against their specific investment strategy to optimize portfolio performance.

Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.

In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.