3 Dividend-Paying Pharma Stocks Worth Watching for Steady 2026 Gains

Not all growth opportunities require aggressive risk-taking. Investors seeking to build a strong portfolio with steady income and long-term wealth creation can benefit from adding dividend-paying stocks. In return, these stocks provide a predictable income stream, helping cushion portfolios during periods of market volatility.

Stocks that pay regular dividends offer an attractive investment opportunity. Investors always look for greater yields and returns on investments. Regular dividend hikes reflect confidence in operational strength, which, in turn, fuels earnings power. For investors who do not rely on regular income, reinvesting dividends can significantly enhance capital appreciation and long-term wealth creation through the power of compounding.

In this connection, large pharmaceutical companies stand out as dividend-friendly investments, as their stable cash flows support regular dividend payouts and long-term dividend growth. They offer a combination of resilient demand for essential medicines, diversified product portfolios and the financial strength to support consistent shareholder returns. Investors find appeal in this sector since it is largely insulated from economic cycles, given the ongoing need for innovative medical treatments.

What Favors Pharma Stocks in 2026?

Several large drugmakers have signed drug pricing agreements with the Trump administration in the past three to four months, marking a more cooperative stance between the sector and the government after years of regulatory tension. Although the reduced drug prices will likely hurt profits in the near term, we expect broader patient access could drive higher prescription volumes, partially offsetting the revenue impact over time.

Innovation is likely to drive growth in the industry, with a focus on high-growth areas such as obesity, gene therapy, inflammation and neuroscience, which carry significant commercial potential.

We also expect M&A activity to remain strong in 2026, with the focus likely to be on selective, innovation-driven biotech acquisitions rather than large-scale consolidation. To manage costs and reduce risk, industry players may increasingly favor collaboration and licensing agreements over outright takeovers.

Dividend Stocks for Your Portfolio

In this article, we highlight three dividend-paying, large-cap pharma companies — Johnson & Johnson JNJ, AbbVie ABBV and Merck MRK. These stocks have been identified with the help of the Zacks Stock Screener, based on a dividend yield greater than 2% and a five-year historical dividend growth crossing 5%.

Johnson & Johnson

J&J is generally considered to be one of the safest and highest-rated stocks by financial analysts. It maintains the S&P Global’s top-tier ‘AAA’ credit rating, highlighting its exceptional financial strength. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

J&J is a member of the S&P Dividend Aristocrats, an index that tracks companies that have increased their dividends for at least 25 consecutive years. It is known to be one of the few companies that have hiked dividends for 63 consecutive years. The company’s current dividend of $5.20 per share yields 2.50%, better than the industry average of 1.87%. J&J’s payout ratio presently sits at 50% of earnings, with a five-year dividend growth rate of 5.39%.

Johnson & Johnson Dividend Yield (TTM)

 

 

 

 

 

 

 

Johnson & Johnson dividend-yield-ttm | Johnson & Johnson Quote

J&J’s Innovative Medicines/Pharma segment is performing above market, despite currency headwinds and the impact of biosimilar and generic competition on sales of some key drugs. The growth is being driven by key drugs like Darzalex, Erleada and Tremfya, as well as continued uptake of new launches, including Spravato, Carvykti and Tecvayli. J&J expects the Innovative Medicine business to grow 5% to 7% from 2025 to 2030, with oncology sales projected to surpass $50 billion by the end of the decade.

In 2026, JNJ also expects better growth in the MedTech business than in 2025 so far, driven by increased adoption of newly launched products across all MedTech platforms and increased focus on higher-growth markets.

AbbVie

This company is known for its robust dividend profile, supported by a strong diversified portfolio of marketed drugs. ABBV currently carries a Zacks Rank #3 (Hold).

Like J&J, AbbVie is also a member of the S&P Dividend Aristocrats. In October, the company declared a 5.5% increase in quarterly dividend to $1.73 per share, payable in the first quarter of 2026. ABBV has been increasing its dividend annually since coming into existence in 2013, after Abbott Laboratories (also a member of the Dividend Aristocrats) divested its pharmaceutical division. The stock currently offers a dividend yield of 2.85%. AbbVie’s payout ratio is approximately 69% of its earnings, with a five-year dividend growth rate of 6.14%.

AbbVie Inc. Dividend Yield (TTM)

 

AbbVie Inc. dividend-yield-ttm | AbbVie Inc. Quote

AbbVie is a leading player in immunology, driven by Skyrizi and Rinvoq, which have successfully replaced the legacy drug Humira following the loss of its U.S. exclusivity in 2023 and now anchor the company’s growth profile. Supported by strong and accelerating demand for these newer immunology therapies, AbbVie has returned to a more stable growth trajectory. Looking ahead, the company expects a high single-digit revenue CAGR through 2029, aided by a favorable patent runway and additional contributions from its oncology and neuroscience portfolios.

Merck

This company stands out within the large-cap pharma space, supported by a strong portfolio in the oncology space. The stock currently carries a Zacks Rank #3.

Merck declared a 4.9% increase to 85 cents per share in quarterly dividend payable in the first quarter of 2026. It has consistently hiked its dividend 15 times over the past 14 years. The company’s current dividend yield of 3.18% betters the industry average of 1.87%. This pharma giant’s payout ratio currently sits at 37% of earnings, with a five-year dividend growth rate of 5.43%.

Merck & Co., Inc. Dividend Yield (TTM)

 

Merck & Co., Inc. dividend-yield-ttm | Merck & Co., Inc. Quote

Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda has been playing an instrumental role in driving Merck’s steady revenue growth in the past few years. Merck’s other oncology drugs, Welireg, AstraZeneca-partnered Lynparza and Eisai-partnered Lenvima, are also contributing to top-line growth. Over the past few years, Merck has almost tripled its late-stage pipeline, supported by growth through both organic and inorganic means. This has positioned the company to launch around 20 new vaccines and drugs over the next few years, with many having blockbuster potential. Through these launches, Merck intends to address concerns around the upcoming loss of exclusivity of Keytruda in 2028.

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This article originally published on Zacks Investment Research (zacks.com).

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