3 No-Brainer Dividend Stocks to Buy Right Now

With the S&P 500 looking historically expensive at 31 times earnings, it's a good time to buy a few defensive dividend stocks to hedge against a market crash. These stocks might also swoon during a downturn, but they'll reward patient investors with steady income. If you reinvest those dividends, you'll also accumulate more shares at lower prices.

The healthcare sector is a good place to find stable dividend stocks, as the market leaders usually generate ample cash and are well insulated from macro headwinds. These three pharma giants check those boxes and are arguably no-brainer income plays right now: AbbVie (NYSE: ABBV), Johnson & Johnson (NYSE: JNJ), and Pfizer (NYSE: PFE).

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AbbVie

AbbVie struggled after its blockbuster autoimmune disease drug, Humira, lost its U.S. patent exclusivity in 2023. But it offset that pressure with two newer immunology drugs, Skyrizi and Rinvoq, which it expects to generate combined sales of over $31 billion by 2027. It's also spent more than $20 billion on acquisitions over the past three years to diversify its portfolio.

AbbVie has raised its dividend every year since its spin-off from Abbott Laboratories (NYSE: ABT) in 2013. It currently pays a forward yield of 2.7%, and its dividends only consumed 59% of its free cash flow (FCF) over the past 12 months.

Wall Street expects AbbVie's adjusted EPS to grow 42% in 2026 and 14% in 2027, driven by its Skyrizi and Rinvoq, the expansion of its neuroscience business, the stabilization of its oncology portfolio, and its resilient sales of Botox (which it gained from its takeover of Allergan in 2019). At 18 times forward earnings, it still looks like a bargain in this frothy market.

Johnson & Johnson

Johnson & Johnson has raised its dividend for 64 consecutive years. After its 50th dividend hike, it became a Dividend King. It currently pays a forward yield of 2.1%, and its trailing payout ratio of 60% gives it plenty of room for future increases.

Over the past few years, J&J streamlined its business by divesting its slower-growth segments. Today, it only operates two core businesses: Innovative Medicine, which sells pharmaceutical products; and MedTech, which sells medical devices.

The Innovative Medicine segment -- which sells higher-margin, patent-protected drugs for cancer, autoimmune diseases, cardiopulmonary conditions, and neurological disorders -- is driving most of its growth. Its blockbuster psoriasis drug, Stelara, lost its patent exclusivity in the U.S. last year. Still, it expects its sales of newer drugs -- including Tremfya for autoimmune disorders and Icotye for psoriasis -- to offset that pressure.

Analysts expect J&J's adjusted EPS to rise 7% in 2026 and 10% in 2027. Its stock still looks reasonably valued at 22 times forward earnings, and its scale and diversification will enable it to easily recover from the next market downturn.

Pfizer

Pfizer's stock soared during the pandemic as its sales of COVID-19 vaccines skyrocketed, but it plummeted after the pandemic ended. To fill that void, Pfizer acquired more companies (including the oncology company Seagen in 2023) but struggled to keep pace with its peers in the GLP-1 race. At the same time, several of its top-selling drugs faced patent cliffs.

However, Pfizer recently reached settlements with three generic drugmakers to extend the patent protection of Vyndamax, one of its best-selling drugs, through 2031. That extension will buy it more time to expand its respiratory vaccine, oncology, and GLP-1 portfolios.

Pfizer's stock will remain in the penalty box until those tailwinds kick in, but it looks dirt cheap at 8 times forward earnings and pays a hefty forward yield of 7.1%. Its dividend payments eclipsed its EPS and FCF over the past 12 months, and it hasn't raised its payout for over a year, but it will likely only slash its dividend as a last resort if its turnaround efforts fizzle out. It's a riskier play than AbbVie and J&J, but it also has a lot more upside potential if it plays its cards right.

Leo Sun has positions in AbbVie and Pfizer. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, and Pfizer. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.