The healthcare sector is home to many prominent corporations. 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 important innovations, posting consistent financial records, and rewarding long-term shareholders.
However, it isn't too late to invest in Eli Lilly or Johnson & Johnson: These companies still have plenty to offer. Let's find out more.
1. Eli Lilly
Eli Lilly has made a lot of noise lately thanks to its work in the diabetes and obesity care markets. Its newest approvals in this field, Mounjaro for diabetes and Zepbound for weight loss, promise to become some of the best-selling drugs in the world. Mounjaro's revenue exceeded $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 several more exciting programs in development in these areas.
The company's insulin efsitora alfa is a once-weekly insulin product currently in phase 3 testing that it could launch within the next two years, provided it crosses the remaining regulatory barriers in its way. In the weight loss field, Eli Lilly is developing medicines like mazdutide and retatrutide; the latter could generate as much as $5 billion in revenue by 2030, according to the research company Evaluate Pharma. So, despite plenty of would-be challengers in the weight loss market, Eli Lilly still looks ahead of the pack.
However, it would be a mistake to think the company is simply focused on diabetes and weight loss. Eli Lilly has made significant strides elsewhere, including in Alzheimer's disease (AD), which has been one of the toughest areas to crack over the past couple of decades. Lilly recently earned approval for Kisunla, a therapy for early symptomatic AD. The pharmaceutical giant is expecting many more approvals and label expansions in the next half-decade.
Eli Lilly's revenue and earnings should grow much faster than most of its similarly sized peers in the pharmaceutical industry. Moreover, the company is a solid dividend stock. Lilly's forward yield of 0.65% at recent prices might 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 for growth or income, Eli Lilly is a top pick this month for investors who are focused on the long game.
2. Johnson & Johnson
Johnson & Johnson hasn't performed well in recent years. The healthcare giant has dealt with various issues, including a relatively recent law in the U.S. that will allow Medicare to negotiate the prices of certain drugs, which should lead to less revenue for the companies that sell these medicines. Some of J&J's products will be targeted.
However, Johnson & Johnson's business remains appealing to some investors. The company's extensive and diversified portfolio of medicines and medical devices, worldwide footprint, and vast experience in navigating the healthcare industry all grant it significant advantages.
In its pharmaceutical segment, J&J boasts more than 10 blockbuster medicines. The company can handle disruptions to one of its business segments without incurring significant losses. It should also survive various patent cliffs -- and, for that matter, Medicare's price negotiations. Johnson & Johnson has the funds and experience to steer its drug development strategy away from this issue, having survived major changes in the regulatory landscape of the healthcare industry over the past 100 years.
Furthermore, Johnson & Johnson recently split from its consumer health segment, which became a stand-alone corporation by the name of Kenvue; this move should help improve J&J's top-line growth rates. Though the company won't increase its revenue in line with growth stocks, you can expect stability and predictability from its financial results over the long run. It boasts an AAA rating from Standard & Poor's -- the highest credit rating available, and a testament to the strength of its balance sheet -- for good reasons.
Lastly, Johnson & Johnson is an exceptional dividend stock: The company has increased its payouts for a whopping 62 consecutive years. Its forward yield tops 3% at recent prices. J&J is a terrific blue chip dividend stock to buy this month.
Should you invest $1,000 in Eli Lilly right 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 to Buy Hand Over Fist in August was originally published by The Motley Fool