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We recently compiled a list of the Retirement Stock Portfolio: 10 Healthcare Stocks to Buy. In this article, we are going to take a look at where CVS Health Corporation (NYSE:CVS) stands against the other healthcare stocks.
Healthcare stocks are widely considered a cornerstone of a retirement portfolio due to their resilience, long-term growth potential, and ability to provide steady income through dividends. This sector encompasses pharmaceutical companies, healthcare providers, biotechnology firms, and medical device manufacturers, all of which are positioned to benefit from enduring trends like aging populations and advancements in medical technology. One of the most compelling reasons to include health stocks in a retirement portfolio is their defensive nature. Health care is a necessity, not a luxury, meaning demand for medical products and services remains steady, even during economic downturns. According to a report by Morningstar, the healthcare sector outperformed the broader market in 75% of US recessions over the past 50 years, demonstrating its ability to provide stability when other sectors falter.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
Global demographic trends also favor health stocks. The United Nations projects that the number of people aged 65 and older will double by 2050, reaching 1.5 billion. This aging population will drive increased demand for chronic disease management, prescription medications, and long-term care services. The US alone spends over $4.3 trillion annually on health care, according to the Centers for Medicare & Medicaid Services, accounting for nearly 20% of GDP. This figure is expected to rise to $6.8 trillion by 2030, driven by advances in medical technology and higher spending on aging-related health issues. Health stocks, particularly those of established pharmaceutical companies, often provide attractive dividend yields, making them ideal for income-focused retirees.
Drug giants are known for consistently paying and increasing dividends. Dividends provide retirees with regular income, reducing the need to sell assets during market downturns. The healthcare sector is also at the forefront of technological innovation, offering exposure to high-growth areas such as biotechnology, precision medicine, and artificial intelligence in healthcare. Healthcare stocks provide diversification in a retirement portfolio as well, balancing out more volatile sectors like technology or energy. Additionally, healthcare ETFs like the Health Care Select Sector SPDR Fund offer exposure to a wide range of companies, spreading risk while capturing growth potential. For example, Health Care Select Sector SPDR Fund has delivered a 10-year annualized return of 13.4%, outperforming many other sectors.