What Is Considered a Good Stock Dividend? 3 Healthcare Stocks That Fit the Bill

Key Points

• If you were looking only at yield, you might rush out to buy Pfizer and its 7.2% dividend yield right now.

• Income investors trying to live off of dividends, however, have to look past yield to consider dividend reliability.

• If you are looking for reliable and high-yield dividend stocks, you'll want to consider Johnson & Johnson, Omega Healthcare, and Merck.

• 10 stocks we like better than Pfizer ›

It is tempting for a dividend investor to simply select the highest yielding stocks. The problem with that approach is that it exposes you to the risk of dividend cuts if the yield is too high for the company to support.

Which is why dividend lovers also need to consider dividend history as they look at a company. And, when you do that, you'll find that companies like Pfizer (NYSE: PFE), which has a huge 7.2% yield, don't match up to companies like Johnson & Johnson (NYSE: JNJ), Omega Healthcare (NYSE: OHI), and Merck (NYSE: MRK).

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Here's what you need to know about these three healthcare dividend stocks.

Image source: Getty Images.

1. If you need the money to live, dividend reliability is key

Pfizer is actually a well-run company. Sure, it is facing hard times right now, but it has dealt with difficult periods before and survived. It is highly likely that it will do so again, noting that some of the issues it is dealing with are a natural part of the pharmaceutical industry. For example, patent expirations are on the horizon, and it needs to find new drugs to replace older ones. Investors rightly worry about such patent cliffs, but they aren't the least bit unusual for drug makers.

That said, Pfizer's huge 7.2% dividend yield is also a reflection of the downbeat view among regulators and consumers around vaccines. So there's more to watch here than the normal industry swings. But the same things could, largely, be said of Merck, one of Pfizer's competitors. The drugs and vaccines in question are different, but the worries are basically the same. You could easily buy either one if you wanted exposure to the pharma sector. Why pick Merck and its less impressive, though still high, 4% yield?

The answer is simple. Merck has a long history of supporting its dividend even through difficult periods. Pfizer cut its dividend in 2009 when it bought Wyeth. The acquisition was good for Pfizer, but the dividend cut was terrible for income investors. If dividend consistency matters to you, Merck wins here.

Data by YCharts.

2. Omega Healthcare has survived the hardest of times

If Merck's dividend resilience over time impresses you, you'll probably find Omega Healthcare even more exciting. The company owns senior housing facilities, which were hard hit during the COVID-19 pandemic. To put it simply, older people in group settings were at severe risk of dying from the pandemic. That had the exact negative impact you would expect on nursing homes and similar properties. And yet Omega Healthcare, a senior housing-focused real estate investment trust (REIT), didn't cut its dividend like many of its competitors.

It didn't raise the dividend, either, but it did stand behind the payment, realizing that investors were relying on that quarterly check. That should make Omega's nearly 6.4% yield look a lot more attractive, even for more conservative dividend investors.

Data by YCharts.

And don't forget that the pandemic is now mostly in the rearview mirror. The second quarter of 2025 saw Omega invest in new assets, which should help spur growth and post an 8% year-over-year increase in adjusted funds from operations (FFO). With the business looking like it is on the mend, the dividend is likely more secure now than it has been in years.

3. The Dividend King approach

If you are looking to stick to only the most reliable of dividend companies, however, then you'll want to buy a Dividend King. These are stocks that have raised their dividends for over 50 years. Johnson & Johnson's string of over 60 annual dividend increases makes it the healthcare stock to beat when it comes to dividend reliability. Of course, investors know how reliable this drug and medical device maker is, so the stock is usually afforded a premium valuation. Right now, the yield is around 3% or so, the lowest on this list. However, it is still higher than the 1.7% yield of the average healthcare stock, making J&J a good pick for investors who place a high value on dividend consistency.

Clearly, Johnson & Johnson has its own warts to consider. For example, it faces all of the same issues in the pharma space as Merck and Pfizer. It is also dealing with a lingering class action lawsuit around talcum powder that it once sold. So even this Dividend King isn't risk-free. But if history is any guide, you can count on the dividend continuing to be paid through thick and thin.

Don't just jump at the highest yield

Although there's nothing particularly wrong with Pfizer, a comparison to Merck, Omega, and J&J shows that a high yield isn't the only factor you should consider if you are looking for a good dividend stock. If reliable dividend stocks are what you want populating your dividend portfolio, you will clearly want to look past Pfizer's yield. And when you do that, you'll likely find that Merck, Omega, and Johnson & Johnson all offer a more compelling combination of income reliability and yield.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Pfizer. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.