The S&P 500’s 9% decline in 2025, driven by President Trump’s tariffs and rising trade tensions with China, has created a difficult investment environment. Despite the market weakness, certain healthcare stocks remain attractive, offering dividend yields above 3%, a strong track record of dividend growth, and insulation from direct trade-related impacts. For investors seeking lower volatility amid uncertainty, the following three healthcare names deserve close attention. For those looking for gains with less risk than investing in individual stocks, consider the High-Quality portfolio, which has beaten the S&P 500 and delivered returns of more than 91% since inception.
1. Bristol Myers Squibb (BMY)
Key Investment Attributes:
- Strong 3.9% dividend yield paired with 3.4% average annual dividend growth over three years
- 7% revenue growth in the past year
- Solid profitability, including a 12% operating margin and over 30% operating cash flow margin
- Already down 10% this year, potentially reducing future downside risk
Strategic Advantages:
- Pharmaceuticals exempt from tariffs
- Growing newer product lines help counter legacy product declines
- FDA approval of Cobenfy enhances the pipeline, with further catalysts from emerging drugs
- Revenue diversification across therapy areas reduces risk exposure
2. Merck (MRK)
Key Investment Attributes:
- Appealing 3.5% dividend yield with 5.7% annual dividend growth
- 7% year-over-year revenue growth
- Approximately 30% margins for both cash flow and operations
- Stock has declined 20% this year, partly due to lower Gardasil sales in China
Strategic Advantages:
- Exempt from tariff risks under current pharmaceutical guidelines
- Keytruda continues to dominate, with $30 billion in annual sales and three years of exclusivity left
- Promising pipeline includes MK0616, Bomedemstat, and Patritumab Deruxtecan
- Strong R&D backed by innovation across multiple therapeutic areas
3. Medtronic (MDT)
Key Investment Attributes:
- Consistent 3.1% dividend yield with 3% annual dividend growth
- 2% revenue growth year-over-year, with 18% operating margin and 22% cash flow margin
- Stock has performed well in 2025 despite broader market weakness
Strategic Advantages:
- Limited exposure to China, with imports below 1% and only 7% of total revenue from the region
- Rapid growth in surgical and diabetes product segments
- Dominance in various medical device markets ensures a durable competitive edge
- Stable recurring revenues from consumables support long-term performance
Takeaway
Amid the 2025 market turbulence driven by trade concerns and volatility, these three healthcare dividend stocks offer reliable income and relative safety. They provide attractive entry points for investors seeking defensive positions with exposure to long-term healthcare growth.
You can also explore the Trefis RV strategy, which has outperformed a blend of all-cap benchmarks (S&P 500, S&P mid-cap, and Russell 2000), delivering robust investor returns. Alternatively, the High Quality portfolio has consistently outpaced the S&P and returned over 91% since inception.
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