3 High-Yield Healthcare Stocks to Buy and Hold for Decades

In times of economic uncertainty, investors often turn to defensive sectors where demand remains resilient regardless of market conditions. The healthcare industry, with its essential services and recurring revenue streams, has long been a favorite among long-term investors. When combined with companies that offer both strong dividend yields and long-term growth potential, healthcare stocks can form the backbone of a robust, income-focused portfolio.

In this article, I'll highlight three healthcare stocks that not only provide attractive dividend yields but also demonstrate the financial strength and innovation needed to compound wealth over decades. These companies have proven track records of navigating industry challenges while rewarding shareholders through consistent dividends and reinvestment in growth opportunities.

1. Pfizer Inc. (PFE) - A Dividend Powerhouse with a 7.03% Yield

Pfizer stands out as one of the most compelling healthcare stocks for income-focused investors. With a forward annualized dividend yield of 7.03%, the company offers one of the highest yields among major pharmaceutical firms. This yield is supported by a payout ratio of 55.77%, indicating a strong balance between dividend payments and reinvestment in the business.

The recent quarterly dividend of $0.43 per share, paid on September 2, 2025 (with an ex-dividend date of July 25, 2025), reflects a consistent approach to shareholder returns. Notably, Pfizer has increased its dividend for 16 consecutive years, demonstrating its commitment to rewarding long-term investors.

Pfizer's diverse product portfolio, including blockbuster drugs like Eliquis and Paxlovid, provides a solid foundation for future growth. The company's acquisition of Seagen has further strengthened its oncology pipeline, positioning it to capitalize on the growing demand for cancer treatments. With a dividend safety rating of A+ and yield attractiveness rating of A+, Pfizer offers a rare combination of high yield and financial stability.

2. Merck & Co. Inc. (MRK) - A Balanced Approach to Growth and Income

Merck offers a more moderate but still attractive dividend yield of 3.8%, with a consistent pattern of payments that has seen the company increase its dividend for over 13 consecutive years. The recent quarterly dividend of $0.81 per share (paid on October 7, 2025, with an ex-dividend date of September 12, 2025) reflects this commitment to shareholder returns.

What sets Merck apart is its balanced approach to growth and income generation. The company maintains a strong position in key therapeutic areas, including oncology (with Keytruda) and vaccines (with Gardasil). While analysts anticipate some near-term challenges in Keytruda sales in 2026, Merck's diversified portfolio across cardiology and oncology provides a strong foundation for long-term stability.

Merck's ability to navigate industry challenges while maintaining consistent dividend payments makes it an ideal long-term holding. The company's recent performance and analyst ratings suggest it is well-positioned to continue rewarding shareholders for years to come.

3. Eli Lilly & Co. (LLY) - Innovation-Driven Growth with a 0.76% Yield

While Eli Lilly's dividend yield of 0.76% is relatively low compared to its sector peers, the company's long-term growth potential and financial strength make it a compelling addition to a diversified healthcare portfolio. The recent quarterly dividend of $1.13 per share (with an ex-dividend date of August 14, 2023) reflects a payout ratio of 58.51%, indicating a balance between dividend payments and reinvestment in the business.

Eli Lilly has demonstrated a remarkable ability to innovate and expand its product offerings. With key catalysts including the daily oral GLP-1 drug orforglipron and cardiology drug tirzepatide, the company is well-positioned to capitalize on the growing demand for diabetes and cardiovascular treatments. Analysts highlight its robust drug development pipeline and reliable core products as key strengths.

The company's average annualized dividend growth rate of 15.30% over the past year further underscores its commitment to rewarding shareholders. While the current yield may not be as high as some of its peers, Eli Lilly's strong fundamentals and growth potential make it a compelling long-term investment.

Strategic Considerations for Long-Term Investors

When building a portfolio focused on long-term compounding and dividend sustainability, it's essential to consider both the immediate yield and the company's ability to grow earnings and dividends over time. The three stocks discussed above represent different approaches to achieving this goal:

1. Pfizer offers an exceptionally high yield supported by a strong financial position and diversified product portfolio.
2. Merck provides a balanced approach to growth and income generation with consistent dividend payments.
3. Eli Lilly demonstrates innovation-driven growth potential, supported by a strong R&D pipeline and a history of dividend growth.

Investors should consider these stocks as part of a broader, diversified portfolio that includes a mix of high-yield and growth-oriented assets. While the healthcare sector offers inherent defensive qualities, it's still important to maintain a balanced approach to risk management.

Final Thoughts

As we look to the future, the healthcare sector remains a compelling area for long-term investors seeking both income and growth. The companies discussed in this article have demonstrated the ability to navigate industry challenges while rewarding shareholders through consistent dividends and reinvestment in growth opportunities.

Pfizer, Merck, and Eli Lilly represent three distinct approaches to building long-term wealth in the healthcare sector. Whether you're drawn to the high yield of Pfizer, the balanced approach of Merck, or the innovation-driven growth of Eli Lilly, these stocks provide a solid foundation for a diversified healthcare portfolio.

For investors with a long-term horizon, these companies offer the potential to compound wealth over decades while providing a steady stream of income. As always, it's important to conduct further due diligence and consider these stocks within the context of your overall investment strategy.