The U.S. is an aging population. There are over 70 million Baby Boomers, defined as those born between 1946 and 1964. For investors, the implications are clear: the U.S. healthcare sector is likely to see sustained long-term growth.

There are many quality healthcare dividend stocks on the market, and this article will discuss 3 in particular that are attractive for long-term returns.

Healthcare Stock #1: Amgen (AMGN)

Amgen is the largest independent biotech company in the world. Amgen discovers, develops, manufactures and sells medicines that treat serious illnesses. The company focuses on six therapeutic areas: cardiovascular disease, oncology, bone health, neuroscience, nephrology, and inflammation. Amgen generates about $28 billion in annual revenues.

On December 12th, 2023, Amgen announced that it was raising its quarterly dividend 5.6% to $2.25. On August 6th, 2024, Amgen announced second quarter earnings results for the period ending March 31st, 2024. Revenue improved 20.2% to $8.39 billion, which was $40 million more than expected. Adjusted earnings-per-share of $4.97 was down slightly from $5.00 in the prior year and was $0.03 below estimates.

For the quarter, growth was again primarily due to a 26% increase in volumes, offset by 3% lower net selling prices. Sales for Enbrel, which treats rheumatoid arthritis, were lower by 15% to $909 million due to lower prices. Prolia, which treats osteoporosis, grew 13% to a $1.2 billion, driven by volume growth. More than 7.5 million patients were treated with the product in 2023. Repatha, which is used to control cholesterol, increased 25% to $532 million.

Over the last ten years, the company has grown earnings at a rate of 8.8% per year, though that growth has slowed to 5.8% over the last five years. We reaffirm our expected growth rate of 7% annually, down from 9%, due to strength in new products and share repurchases.

The stock has a 2.8% current dividend yield.

Healthcare Stock #2: Gilead Sciences (GILD)

Gilead Sciences is a biotechnology company that operates with a clear focus on antiviral medication and treatments. Its main products include treatments for HIV, Hepatitis B, and Hepatitis C (HBV/HCV), but Gilead has also ventured into other areas such as oncology.

Gilead Sciences reported its second quarter earnings results on August 8. The company generated revenues of $7.0 billion during the quarter, which was above the analyst consensus estimate. The company’s top line was up by 5.5% compared to the previous year’s quarter.

Adjusted for that, Gilead’s product sales would have been up by 6% year over year. HIV drug Biktarvy, Gilead’s biggest drug in terms of sales volumes, grew by a solid 8% compared to the previous year, while Gilead’s oncology portfolio also generated strong revenue growth of 15%. Gilead generated earnings-per-share of $2.01 during the second quarter.

Gilead has updated its revenue guidance range for 2024, forecasting revenues of around $27.3 billion, which would be up slightly compared to the $27.1 billion in revenue that the company generated in the previous year.

Gilead’s HIV business continues to grow, which is why earnings will likely not continue to decline forever; 2019 was a year during which Gilead managed to grow its revenues again, and 2020 was another positive year.

Thanks to efforts by Gilead to grow its sales in the future, there is a good chance that the company’s earnings-per-share will start to climb again as well, although right now Gilead still has to invest meaningfully into pipeline drugs.

GILD stock yields 3.4%.

Healthcare Stock #3: Cigna Corporation (CI)

Cigna is an insurance company. It provides a variety of products including dental, medical, disability and life insurance. It operates four business segments: Evernorth, which provides pharmacy services and benefit management; U.S. Medical, which provides commercial and government health insurance; International Markets; and Group Disability.

On October 31st, 2024, Cigna reported third quarter results for the period ending September 30th, 2024. For the quarter, revenue grew 30% to $63.7 billion, which was $4.1 billion better than expected. Adjusted earnings-per-share of $7.51 compared favorably to adjusted earnings-per-share of $6.77 in the prior year and was $0.26 ahead of estimates.

For the quarter, total customer relationships grew 11.8% to 183.5 million, but this was down from 186.2 million in Q2 2024. Total pharmacy customers grew 22% year-over-year to nearly 120 million, though this was down from 122.5 million in the preceding period. Total medical customers decreased 2.9% year-over-year to 19 million.

We feel that Cigna has some immense competitive advantages. The company is one of the largest names in its industry, giving it a size and scale that is hard to match. Cigna’s acquisition of Express Scripts appears to have been a solid move, strengthening the company’s presence in its pharmacy business. Perhaps most important, an aging demographic will need increased pharmacy and medical services, giving Cigna an incredibly large pool of potential customers.

Cigna stock has a 1.7% dividend yield.

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