CVS Health is slowly righting the ship after several challenging years.
Abbott Laboratories' strong business should improve thanks to an acquisition.
Both healthcare leaders have attractive long-term prospects and solid dividend programs.
No one knows how the stock market will unfold in 2026. Perhaps broader equities will experience significant volatility but perform well by the end of the year, just as they seem to be doing in 2025. Or maybe we'll see a bear market. Whatever happens, though, it's important to focus on buying shares of companies that can weather whatever storm is coming sooner or later, and do well over the long run.
Investing in solid dividend stocks is a great choice here. Let's consider two that are worth buying heading into next year: CVS Health (NYSE: CVS) and Abbott Laboratories (NYSE: ABT).
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CVS has had a terrific year on the stock market, with its shares up 80%. That's because it has shown signs of a rebound after a couple of years of terrible financial results.
The healthcare giant could maintain that momentum in the medium term, as it's still in the midst of important initiatives that should have a meaningful impact on its margins and bottom line. For instance, CVS Health plans to streamline its Medicare Advantage business, a unit where it has struggled to control costs, resulting in squeezed operating margins.
The company's insurance arm, Aetna, will also withdraw from some insurance markets for similar reasons: rising costs and underwhelming performance in recent years. These moves should help boost top-line growth and earnings, eventually. That's what we can expect from the company in the next few years.
Over the long term, CVS is positioned to perform relatively well. The company has a deep healthcare ecosystem encompassing pharmacy services, insurance, primary care, and even a subsidiary that manufactures biosimilar drugs.
CVS Health also has a vast, long-standing presence across the U.S. with a brand name that inspires confidence, having been the choice of millions of patients for decades.
The company will likely continue to encounter some headwinds, including increased competition in the pharmacy industry. However, it has proven (and is still proving) that it can navigate challenges and even adapt, notably by embracing new technologies.
CVS offers ExtraCare Plus, a paid membership option that comes with various perks, including fast shipping on many items. And it recently announced the launch of an artificial intelligence (AI) platform to help patients navigate all aspects of its care services through a single app. These efforts can help it stay ahead, continue delivering excellent financial results, and avoid dividend cuts.
Management has increased the dividend payouts by 33% over the past five years, and the stock now offers a forward yield of 3.4%. All these factors make it a great option for long-term dividend seekers.
Abbott Laboratories is a medical device specialist whose business also encompasses pharmaceuticals, a nutrition segment, and a diagnostics division. The company generates consistent revenue and earnings due to a large portfolio of products, many of which are best-in-class in their respective categories.
Some of them should be growth drivers for a long time. That's especially the case with Abbott's FreeStyle Libre, a franchise of continuous glucose monitoring (CGM) devices. The adoption of CGM technology lags significantly behind its potential, considering that it can help improve outcomes for diabetes patients.
But that's just the tip of the iceberg. Abbott's portfolio also features such products as the MitraClip, used in minimally invasive procedures to fix a leaky heart valve, and the TriClip, which treats a similar issue. Both are among the top products in their respective niches, demonstrating the innovative capabilities of Abbott Labs.
Furthermore, the company just announced an acquisition that will help boost its diagnostic segment. Abbott will acquire Exact Sciences, a manufacturer of cancer diagnostic solutions, for approximately $21 billion in equity value.
Exact Sciences' most famous product, Cologuard, is a minimally invasive option to test for colorectal cancer in patients at average risk; this company has helped push for early diagnosis of the disease, which is the second most common cause of cancer death worldwide. The addition of Exact Sciences will only improve an already strong business with excellent prospects.
And over the long term, Abbott Laboratories should continue to reward shareholders, including through consistent payout increases. Abbott is a Dividend King, a company that has raised its payouts for at least 50 consecutive years. That makes it a reliable dividend payer to consider for your long-term portfolio.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends CVS Health and Exact Sciences. The Motley Fool has a disclosure policy.