Healthcare has quietly become one of the more compelling hunting grounds for income investors right now. Several major names in the sector combine dividend yields well above the market average with valuations that haven’t kept pace with their underlying earnings power, all while trading at share prices accessible to nearly any portfolio size. Three companies in particular stand out for offering that combination.
Novo Nordisk, CVS Health, and Bristol Myers Squibb each carry their own set of challenges and catalysts, but all three currently offer yields more than double what the average S&P 500 stock pays, alongside modest earnings multiples that suggest the market may be underestimating their staying power.
Novo Nordisk (NVO)
Competitive pressure has taken a toll on Novo Nordisk over the past year, with shares down 17% as the company has struggled to keep pace with rival Eli Lilly in the fast-moving weight-loss drug race. Growth has cooled noticeably, and investors have responded by selling.
Still, the underlying business retains real strengths. Novo Nordisk continues to generate substantial revenue from Wegovy and Ozempic, its flagship GLP-1 treatments, and maintains an active pipeline of additional medications working their way through development. One notable data point: a higher-dose formulation of semaglutide, the active compound behind both drugs, has shown meaningfully greater weight-loss results in trials—a development that could help the company claw back ground against Eli Lilly over time.
Trading around $46 per share with a market cap near $150 billion, Novo Nordisk currently changes hands at roughly 11 times trailing earnings while yielding about 5.3%. That combination of a depressed valuation and a well-covered dividend makes the stock worth a closer look, even amid the company’s recent struggles.
CVS Health (CVS)
CVS Health has taken a very different path this year, with shares climbing 18% since January as the company’s financial results have steadily improved and cost pressures have become more manageable. Beyond its familiar pharmacy locations, CVS has built a sprawling healthcare business anchored by its 2018 acquisition of Aetna, and the combined operation now generates roughly $415 billion in trailing revenue.
Despite the stock’s strong run this year, valuation hasn’t gotten stretched. Shares trade around $95, putting the company’s market cap near $120 billion and its forward P/E ratio at approximately 13 based on analyst estimates—a reasonable price given the scale and diversification CVS now offers.
Income investors also get a respectable payout here, with the dividend currently yielding 2.8%. That’s meaningfully below Novo Nordisk’s yield, but still more than double what the typical S&P 500 company pays out.
Bristol Myers Squibb (BMY)
Bristol Myers Squibb rounds out the list, and it’s had an eventful year of its own. Shares are up roughly 20% year to date, with much of that gain tied to speculation about a possible merger with AstraZeneca. Those discussions remain in early stages, and there’s no guarantee a deal ultimately materializes.
Trading around $66 per share near a recent 52-week high, Bristol Myers Squibb still carries a notably low forward P/E ratio of about nine, making it arguably the cheapest name on this list relative to earnings. The market’s hesitancy likely reflects genuine concerns about upcoming patent expirations and what growth looks like on the other side of them.
That said, the company isn’t standing still. Its newer growth-oriented drug portfolio expanded 15% last quarter, even as overall company revenue grew a more modest 6% to $13 billion. With shares yielding close to 3.9%, Bristol Myers Squibb offers income investors a meaningful payout alongside a valuation that provides some cushion against the uncertainty ahead.
