Of all business sectors, healthcare is one that is rarely out of demand.
Because? Because every stage of life, from birth to death, requires health care. That demand doesn’t go away even during recessions and uncertainty. That’s exactly why many investors follow the big names in the industry, like Johnson and Johnson and Abbott Laboratories.
A common trait of these two companies is that they have been operating for decades, weathering market headwinds while constantly increasing their payouts to their investors. But as with any investment, not everything is equal. So what stocks should you add to your portfolio?
Let’s start with Johnson & Johnsonthe larger company of the two. The company operates in two segments: prescription drugs and medical devices and has a global presence in the healthcare industry and has a market capitalization of around $589 billion.
As of this writing, Johnson & Johnson is trading at around $244, up nearly 18% year to date.
Abbott Laboratories is a diversified healthcare company that develops medical devices that help bring healthcare beyond hospitals and into the home.
Abbott currently has a market capitalization of around $179 billion. Its stock is trading at about $102 per share, but unlike JNJ, it is down about 18% since the beginning of 2026.
So, given that Johnson & Johnson is a bigger name and has had its best year yet, which company is the better buy?
Not quite.
These two healthcare giants are often grouped together, but their businesses are not identical.
Johnson & Johnson is more focused and its main strengths are prescription drugs and healthcare technology.
Abbott, on the other hand, is more diversified. It operates in four business segments, highlighting nutrition as one of its most important areas.
To get a better idea of which stocks may be the strongest investment, let’s compare their latest quarterly results.
Metric
Johnson & Johnson
Abbott Laboratories
Sales
$24.56 billion
$11.46 billion
Net income
$5.12 billion
1.78 billion dollars
P/E Ratio (Forward)
21.01
18.00
Price/Sales
6.20
4.00
JNJ generated $24.56 billion in sales, more than double Abbott’s $11.46 billion. That gap also shows up in profitability: Johnson & Johnson posted $5.12 billion in net income, nearly three times Abbott’s $1.78 billion.
Meanwhile, valuation tells a slightly different story.
Abbott trades with a lower forward price-earnings ratio of 18, compared to 21 for Johnson & Johnson. Since the P/E ratio shows how much investors pay for each dollar of earnings, a lower P/E can indicate a cheaper stock, especially when comparing companies within the same peer group.
That said, both companies are trading below the overall healthcare industry average of 22.21, suggesting neither looks particularly expensive by that measure.
The same pattern appears in the price-to-sales ratio, which shows how much investors pay for each dollar of company revenue. Johnson & Johnson is trading at 6.20, while Abbott is down at 4.00.
Johnson & Johnson appears stronger on scale and profitability, while Abbott appears cheaper based on valuation.
Now, the exciting part: dividends.
Johnson & Johnson pays an annual forward dividend of $5.20, which translates to a yield of ~2.13%. It has a dividend payout ratio of 47.22%, meaning that about 47% of its earnings go toward paying out shareholders, leaving plenty of room for reinvestment. Additionally, it has increased its dividends for 63 consecutive years.
Meanwhile, Abbott Laboratories pays $2.52 per share per year, which translates to a yield of about 2.46%, slightly higher than Johnson & Johnson. Its dividend payout ratio is 45.41%. Abbott has a 54-year streak of dividend increases.
According to dividend data, both companies operate at almost the same level.
Since it is very close, let’s see what the experts say:
A consensus among 26 analysts rates Johnson & Johnson stock a “moderate buy,” and its high price target of $280 suggests 15% upside potential.
Meanwhile, analysts are bullish on Abbott Laboratories. A consensus among 28 analysts rates the stock a “Strong Buy,” and its high price target of $158 suggests upside potential of up to 54%.
Despite their differences in size, both JNJ and Abbott have a significant presence in the medical sector. On top of that, they’ve been paying increasing dividends for over 50 years straight. That kind of consistency is a big red flag for any investment.
And although the battle for first place between these two has been very close, the picture changes once you see what Wall Street thinks. Right now, Abbott looks like the more attractive choice. It’s cheaper, pays more and has more benefits. Even the low end of Abbott’s targets indicates growth.
As of the date of publication, Rick Orford had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
