3 Pharmaceutical Stocks That Offer Safety and Growth

Key Points

• Pharmaceutical stocks can offer defensive exposure and dividend income during periods of market volatility.
• AbbVie and Merck have established dividend histories and new treatments that could support growth beyond their leading drugs.
• Gilead Sciences combines a growing dividend with expanding HIV prevention sales and a broader drug portfolio.

Market volatility is unpleasant, but it's important that investors don't force themselves into a false choice between safety and growth. Over the last two years, technology stocks, particularly AI stocks, have driven strong portfolio gains for active and passive investors.

In 2026, the story has changed. That doesn't mean the tech trade is over, but as the new year approaches, many investors are looking for places to wait out the volatility. That's renewed interest in dividend-paying stocks.

Finding the best options in this sector may require a more active approach to stock picking. One area to watch is pharmaceuticals. These companies have a defensive quality because patients will prioritize the drugs and therapeutics they provide in any economy.

Pharmaceutical stocks can also offer reliable, growing dividends. Skeptics will note that these companies often pay dividends to help offset slower growth, which may lag the market. That's fair, but there are several names that have growth catalysts, so investors don't have to sacrifice safety for growth.

AbbVie: The Dividend King That Continues to Earn Investor Trust

AbbVie NYSE: ABBV is part of the exclusive category of stocks known as Dividend Kings. This status defines companies that have increased their dividends for at least 50 consecutive years. For AbbVie, that number is 53, including the dividend history of its former parent, Abbott Laboratories. The forward dividend yield of approximately 2.47% isn't the story; it's the annualized payout per share, which will increase to $7.28 following the company's latest hike in October 2026, with the higher quarterly payment beginning in February 2027.

The safety of that payout comes from both current and future revenue. AbbVie has successfully navigated the Humira patent cliff with Rinvoq and Skyrizi. The company also has a deep pipeline in areas such as immunology and oncology. It also has the balance sheet to make strategic acquisitions, such as that of Apogee Therapeutics, that complement its core portfolio.

ABBV is up nearly 30% in 2026, with much of that growth coming in the last three months as investors have sought more defensive investments. But that only tells part of the story. AbbVie's total return, which includes reinvested dividends over the last 10 years, is 590.11%.

Merck: New Drugs Build a Bridge Beyond KEYTRUDA

Merck & Co. NYSE: MRK is another biopharma stock to consider. Like AbbVie, the base case for Merck starts with a category-leading drug. In this case, it's the company's lung cancer drug, KEYTRUDA. In Q3 2026, Merck reported that KEYTRUDA sales came in at $8.6 billion, a 6% increase.

However, Merck is seeing newer drugs begin to gain traction. This list includes WINREVAIR, whose sales increased 94% to $694 million, and WELIREG, up 58% to $307 million.

That's important because, like AbbVie's Humira, KEYTRUDA faces an upcoming threat from biosimilar competition. The sooner the company can replace KEYTRUDA revenue, the better for shareholders. To that end, Merck has a deep pipeline with drugs in various stages of clinical trial development.

Merck has increased its dividend for 14 consecutive years. The current yield sits near 2.3%, and the annual payout per share is $3.40.

Gilead Sciences: HIV Prevention Powers Growth and a Steady Dividend

Like AbbVie and Merck, the case for Gilead Sciences NASDAQ: GILD starts with a franchise that leads its category. For Gilead, that franchise is HIV. In the third quarter, the company reported earnings per share (EPS) of $2.55 against expectations of $2.19, and revenue of $8.3 billion against $7.81 billion. Revenue rose 6.8% year over year. Management also raised its 2026 product sales outlook to roughly $31 billion–$31.3 billion on strong HIV demand.

Biktarvy is still the workhorse. It grew 10% to $4.1 billion, and its U.S. market share reached a record 53%. The bigger story is Yeztugo, Gilead’s twice-yearly prevention injection. It generated $305 million, compared with $39 million a year ago. Descovy rose 49% to $1 billion. Outside HIV, Trodelvy sales increased 42% to $506 million. That progress matters because Gilead is working to reduce its reliance on a single drug.

The dividend is the anchor. Gilead has increased its dividend for 10 consecutive years. The annual payout per share is $3.28, and the stock yields close to 2%. The yield is lower than AbbVie’s or Merck’s because the stock has run. Shares recently reached a 52-week high, trading as high as $176.05. That leaves the stock close to MarketBeat’s consensus target price of about $171. Investors are buying a quality business, but they should set realistic short-term expectations.

Investors Have Many Options in the Pharmaceutical Sector

Opportunities to combine dividend income with growth potential aren't limited to pharmaceutical manufacturers. UnitedHealth Group NYSE: UNH offers a different approach through its health insurance and services businesses. UNH provides insurance coverage and pharmacy services that help patients access prescriptions from companies such as AbbVie, Merck, and Gilead Sciences.

While the company faces reimbursement and medical-cost pressures, a recovery in operating margins could provide an additional growth catalyst for investors willing to accept those risks.