3 Healthcare Stocks That Pay You While You Wait for the Growth

Some dividend payers suspend their dividend programs when they encounter headwinds, such as slower growth. Others double down and continue issuing regular payouts while they work out ways to overcome the obstacles. Dividend investors prefer companies in the second category to those in the first. And in that spirit, here are three excellent dividend stocks to consider: Bristol Myers Squibb (NYSE: BMY), Medtronic (NYSE: MDT), and Gilead Sciences (NASDAQ: GILD). Here's why these three income stocks are attractive.

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1. Bristol Myers Squibb

Bristol Myers Squibb has faced stiff competition -- including from biosimilars -- in recent years. Top-line growth hasn't been great for the pharmaceutical giant. Things may get worse before they eventually improve permanently. Bristol Myers will face at least two more patent exclusivity losses by the end of the decade. The first is for Eliquis, an anticoagulant, while the other is for its oncology medicine, Opdivo.

These two are among Bristol Myers' best-selling drugs. However, even with the challenges it has encountered, Bristol Myers has maintained its dividend program intact. The payout has increased by 28.6% over the past five years. The drugmaker offers a juicy yield of 4.3% and a conservative cash payout ratio of about 39%.

Bristol Myers should continue rewarding shareholders with payout increases while developing newer products that will, eventually, replace older ones. The company has already made significant progress on that front. It has earned approval for a newer, subcutaneous version of Opdivo that will carry the torch well into the next decade, and other newer brand-new approvals -- such as Reblozyl, a medicine for anemia in patients with beta thalassemia -- are also contributing meaningfully. Bristol Myers should eventually improve its financial results. In the meantime, the dividend is rock solid.

2. Medtronic

Medtronic has also faced slow revenue and earnings growth in recent years. The company has made moves that could help it address these problems. One of them was to spin off its diabetes care unit. Although its sales often grew faster than the rest of the business, Medtronic's diabetes segment had lower operating margins, thereby holding back earnings growth.

Medtronic has also launched newer products that will help improve its results. The company recently posted its fastest top-line growth rate in years, partly thanks to its Pulse Field Ablation devices, which use a novel technology to treat atrial fibrillation (irregular heartbeat).

Medtronic has another brand-new approval that will eventually make a meaningful impact. Last year, it received clearance for its Hugo system, a device that will compete in the underpenetrated robotic surgery market. This and other new launches should help jump-start growth. In the meantime, Medtronic remains an outstanding dividend stock with a 3.3% yield, while it has increased its payouts for 48 consecutive years.

Its cash payout ratio may seem a bit high at 69%, but given Medtronic's track record and robust underlying business, we can rest assured that the dividend is safe.

3. Gilead Sciences

Gilead Sciences' revenue has been impacted by Veklury, a COVID-19 treatment, in recent years. The unpredictability of the coronavirus market hasn't been kind to the biotech giant. However, Gilead Sciences' core business remains strong. The company is one of the leaders in the HIV drug market thanks to medicines like Biktarvy, the top-prescribed HIV regimen.

Gilead Sciences is also making progress in other fields. It has a vast pipeline of oncology candidates, for instance. That should help diversify its lineup and decrease its reliance on its HIV business, while making its coronavirus drug less impactful. It may take years for Gilead Sciences to rejuvenate its drug portfolio, but the company is on the right track. And investors can enjoy the dividend in the meantime. Gilead Sciences' forward yield is 2.5%, and it also routinely increases its dividend.

The company boasts a low cash payout ratio of just 42.3%, given it plenty of room for more payout increases. Gilead Sciences is likely to move beyond its recent headwinds eventually, and it should do so without gutting its dividend program.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Gilead Sciences. The Motley Fool recommends Medtronic. The Motley Fool has a disclosure policy.