3 Healthcare Dividend Stocks Offering More Than Just Income

Key Points

• AbbVie, Johnson & Johnson, and Merck offer growing dividends alongside healthcare pipeline catalysts that appeal to income and growth investors alike.
• AbbVie and Johnson & Johnson are Dividend Kings with decades of consecutive dividend increases, while Merck's payout has grown for 14 straight years.
• Recent FDA approvals, acquisitions, and pipeline advances at all three companies have prompted analysts to raise price targets in recent weeks.

The flight toward dividend-paying stocks is an example of investors taking what the market is giving. In late September, the yield on the 10-year Treasury note climbed above 5%. That's appealing to some income investors, but it won't impress those looking for a combination of growth and income.

Fortunately, the market is handing these investors several opportunities in large-cap, blue-chip stocks. Not only do these stocks offer attractive, growing dividends, but they also provide exposure to the healthcare sector, which analysts continue to see as a growth area that will persist into 2027.

AbbVie Still Has Room for More Growth

After lagging the market for the first few months of 2026, AbbVie NYSE: ABBV is making up for lost time. ABBV is up about 15% in 2026, which has pushed the stock near its 52-week high. However, since the company's Q2 2026 earnings report in July, several analysts have raised their price targets.

That optimism was rewarded on Sept. 28 when the U.S. Food & Drug Administration (FDA) approved Juvmo (tavapadon), AbbVie's once-daily pill for adults with Parkinson's disease. It's the first and only selective D1/D5 receptor agonist approved for this use. This opens the door to a potential multi-billion-dollar market in the United States.

The announcement gives AbbVie a catalyst beyond its leadership in immunology. That position was enhanced by the company's $10.3 billion acquisition of Apogee Therapeutics on Sept. 3.

AbbVie is part of the exclusive group of stocks known as Dividend Kings. The company is likely to increase the payout of its dividend for the 54th consecutive year before the end of the year. That dividend currently pays $6.92 per share annually.

Johnson & Johnson: Delivering Long-Awaited Progress

Johnson & Johnson NYSE: JNJ is proving that a 140-year-old company can still move fast. The healthcare giant has stacked up regulatory wins in 2026. Several of those were years in the making.

The most recent came on Aug. 24. The FDA approved Imaavy (nipocalimab) for warm autoimmune hemolytic anemia (wAIHA), a rare and life-threatening autoantibody disease. It's the first approved treatment for the condition. In July, the FDA granted De Novo authorization for OTTAVA, J&J's table-integrated soft tissue surgical robot.

Immunology is where the story gets bigger. Stelara sales continue to decline, and investors have wondered what fills that gap. The answer is taking shape. Icotyde, approved in March, is the first oral IL-23-targeting drug for plaque psoriasis. Tremfya received a label expansion in May. On Sept. 25, it met its primary endpoints in a Phase 4 study for axial psoriatic arthritis.

The pipeline reinforces the growth story. Rybrevant Faspro received Priority Review in July for head and neck cancer. Caplyta, acquired with Intra-Cellular Therapies, posted positive Phase 3 results in bipolar mania.

Then there's the growing dividend. JNJ is another Dividend King that has raised its payout for 64 consecutive years. In April, it lifted the quarterly dividend to $1.34 per share. That's $5.36 annually, a yield just under 2%.

The one caution is valuation. JNJ is currently trading just below its consensus price target of $275.87. Analysts rate it a Moderate Buy, but much of the good news may be priced in. For income investors, that argues for buying on pullbacks rather than chasing.

Merck & Co.: A Pipeline Built for the Post-Keytruda Era

Merck & Co. NYSE: MRK has heard the same question for years. What happens when Keytruda's patent expires in 2028? The company's answer is one of the broadest pipelines in the industry. Merck has roughly 80 Phase 3 studies underway.

Oncology remains the anchor. Keytruda Qlex, the subcutaneous version, generated $463 million in second-quarter sales. That's an early sign Merck can extend the franchise. Management also views sac-TMT as central to its oncology strategy, including in combination with Keytruda. Welireg sales jumped 67% in the second quarter.

Merck is also buying growth. The company acquired Terns Pharmaceuticals to expand its hematology pipeline. It also signed a $2.13 billion exclusive global license agreement with SciBrunch Therapeutics for an oral KRAS G12D inhibitor (oncology).

The pipeline also reaches beyond cancer. Winrevair sales grew 75% in the second quarter, and the FDA recently expanded its label. Remigromig also met its primary endpoint in diabetic macular edema.

The $3.40 annual dividend has grown for 14 straight years and yields about 2.3%. On paper, Merck's payout ratio is a jaw-dropping 272%. That number is distorted by one-time charges tied to the Terns and Cidara deals. Based on next year's estimates, the payout ratio falls to about 35%.

Analysts are buying the pipeline story. On Sept. 29, Scotiabank raised its price target to $180 from $155. HSBC, Guggenheim, and Leerink Partners all lifted targets earlier this month. MRK trades just slightly above its $145.76 consensus target, suggesting that the targets are still catching up to the stock.