Key Points
Johnson & Johnson is one of the largest pharmaceutical stocks by market cap.
Pfizer's dividend offers a hefty yield.
Revenue is growing for J&J, while Pfizer is leaning on acquisitions to help spur growth.
- 10 stocks we like better than Johnson & Johnson ›
As large tech companies struggled this year, investors have had a chance to reevaluate their portfolios and identify where they may be underexposed to certain sectors.
One of those sectors may be healthcare, which is easy to understand. Because artificial intelligence (AI) has commanded the spotlight for the last several years and policy uncertainty swirls around that industry, it was easy for pharmaceutical stocks to slip under the radar.
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That's why we'll look at two stocks that have climbed this year while the S&P 500 has slipped, to see if there's more momentum ahead. Those two are Johnson & Johnson (NYSE: JNJ) and Pfizer (NYSE: PFE).
Image source: Getty Images.
Leaner and more efficient
Before 2023, Johnson & Johnson was a large conglomerate that dabbled in everything from consumer goods to medical devices to pharmaceuticals. Sometimes that scale creates efficiencies that work together, turning a company into a formidable powerhouse. Yet sometimes it makes operations overly complex, slows innovation, and hamstrings the ability to establish priorities.
For Johnson & Johnson, it was a case of the former rather than the latter. So in 2023, it spun off its slow-growing consumer health division into a new business, Kenvue, through an initial public offering.
The separation, at least for Johnson & Johnson, appears to be working. In 2024, J&J recorded $88.8 billion in revenue, topping that in 2025 with $94.2 billion. For 2026, the company expects sales to range from $99.5 billion to $100.5 billion.
A budding pipeline and growth through acquisitions
As sales of its COVID-19 vaccine have declined, so too did Pfizer's total revenue. Sales nosedived from around $100 billion in 2022 to $59.5 billion in 2023. Ever since, Pfizer has been figuring out what's next.
The answer is a growing pipeline of drugs in development across several focus areas.
In particular, Pfizer has worked on strengthening its oncology segment through the acquisition of Seagen. According to Fortune Business Insights, the global oncology drug market could grow from roughly $286 billion in 2026 to more than $679 billion by 2034.
The company also acquired Metsera in November 2025, giving it a stronger foothold in the anti-obesity market.
Revenue isn't anywhere near where it was before vaccine sales declined, but it has been steady. For 2026, Pfizer forecasts revenue will be in a range between $59.5 billion and $62.5 billion. At the high end, that would be right around its totals for 2024 ($63.6 billion) and 2025 ($62.6 billion).
Who wins the healthcare stock battle?
With all the investing concerns swirling around, ranging from stubborn inflation to an AI bubble to the war in Iran, both companies offer similar downside protection with their dividend payouts.
Pfizer has a significant dividend payout, yielding over 6%. With its forward price-to-earnings (P/E) ratio of 9.6, it may look undervalued. Johnson & Johnson's dividend yield of 2.1% is lower than Pfizer's, and its forward P/E of 21.1 is higher.
Diving a little bit deeper, those lower expectations for future earnings for Pfizer may actually be more of a warning sign than a signal for a value play. Revenue isn't expected to grow in 2026, and the company needs its pipeline to do some heavy lifting over the next few years.
That brings us to the income Pfizer offers. The company does have a history of rewarding shareholders through its consistent dividend payout. However, flat revenue and upcoming patent cliffs raise concerns about the sustainability of the current dividend.
In comparison, Johnson & Johnson is being priced for higher growth. Though it will have to meet those higher expectations, investors apparently believe in its ability to generate higher future earnings. Its dividend yield may be lower than Pfizer's, but there's less of a concern about sustainability -- Johnson & Johnson has increased its dividend payout for more than 60 consecutive years.
I'd give the edge to J&J in this comparison. With its broad portfolio, steady cash flow, increasing revenue, and reliable dividend payouts, Johnson & Johnson is not only a company to consider for today's market but also one that could benefit its shareholders over the next decade.
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Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kenvue and Pfizer. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
