Investors seeking stable stocks to hold over the long term often turn to dividend-paying companies. These not only provide a consistent stream of passive income but have also outperformed non-dividend peers in the long run. Healthcare companies hold an added advantage as they operate in a defensive industry that performs relatively better during economic slowdowns.

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Merck: Navigating Challenges and Maintaining Leadership

The market's forward-looking nature is evident in Merck's stock performance this year. Its shares have declined by 10% as investors anticipate the loss of patent exclusivity for its key cancer drug Keytruda in 2028. However, Merck is not without options. The company is working on a subcutaneous version of Keytruda, which could extend its patent life and earn similar indications. Additionally, its recent partnership with LaNova Medicines to develop LM-299 shows its proactive approach.Merck's success is not solely dependent on Keytruda. Its portfolio includes other products such as Winrevair for pulmonary arterial hypertension, a thriving vaccine business, and a strong animal health unit. With over 60 programs in phase 2 studies and more than 30 in phase 3 clinical trials, the company has a robust pipeline. Its financial results remain solid, with third-quarter revenue growing by 4% year over year to $16.7 billion. Despite a 26% decline in adjusted earnings per share due to acquisition-related expenses, this is not a cause for concern for investors. Over the past decade, the dividend has increased by 80%, and the forward yield stands at 3.18%, outperforming the S&P 500 average.

Medtronic: A Steady Player with Growth Opportunities

Medtronic, a medical device specialist, has faced some challenges in the past few years. The pandemic disrupted its business, and it had plans to shed low-growth units but later reversed that decision. Nevertheless, it remains a worthy investment for long-term dividend investors. The company is one of the largest in its field, with a diverse portfolio of dozens of products and operations in over 150 countries.In its diabetes care segment, Medtronic has seen significant growth. In the second quarter of fiscal 2025, revenue increased by 5.3% year over year to $8.4 billion, with the diabetes care unit reporting even higher growth of 12.4%. Its innovative MiniMed 780G insulin pump is a key product in this segment, and with the large global market for diabetes, there is ample room for growth.The company is also developing a robotic-assisted surgery (RAS) system called Hugo, which is undergoing clinical trials in the US. The RAS market is highly underpenetrated, presenting another long-term opportunity. Medtronic has increased its dividend for 47 consecutive years and offers a forward yield of 3.20%, making it a top income stock.In conclusion, both Merck and Medtronic offer attractive investment opportunities for those focused on the long term. While Merck faces challenges related to Keytruda, its proactive approach and diverse portfolio give it the potential to overcome them. Medtronic, with its solid market position, growth opportunities, and impressive dividend track record, is a reliable choice for income investors. By carefully considering these healthcare dividend stocks, investors can build a portfolio that generates both income and long-term growth.