2 Very Healthy Dividend Stocks to Hold for Decades of Income

Checking a company's vital signs before investing in its stock for dividend income is essential. If the underlying company isn't financially healthy, its dividend probably won't last very long.

That won't be a problem with Johnson & Johnson (NYSE: JNJ) and Medtronic (NYSE: MDT). They're healthy companies that should continue to pay durable dividends in the decades ahead, making them great income investments.

As healthy as it gets

Johnson & Johnson is among the world's healthiest companies. The healthcare giant has AAA-rated credit, which is higher than the U.S. government and tied with Microsoft for the best credit in the world.

The company has a pristine balance sheet. It ended the third quarter with only $36 billion of debt -- less than 10% of its market cap -- against $20 billion of cash and marketable securities. Subtract that cash from its debt, and it has $16 billion of debt on a net basis. That's an extremely affordable level, considering that Johnson & Johnson generates about $14 billion of annual free cash flow. It's also plenty of cash to cover its dividend of $3 billion per quarter, or $12 billion each year.

Johnson & Johnson has been using its excess free cash and strong financial position to make acquisitions. This year, it has deployed $18 billion to acquire Shockwave Medical, V-Wave, and a couple of drug development companies. These deals have helped enhance its MedTech and Innovative Medicines platforms by supplementing the $11.9 billion it has invested in research and development (R&D).

The healthcare giant's heavy investments will help grow its earnings. That should allow the company to continue increasing its dividend. Johnson & Johnson has raised its payment for 62 straight years, qualifying it as a Dividend King -- a company with 50 or more years of annual dividend increases. The company currently has a dividend yield of over 3%, which is more than double that of the S&P 500.

A healthy balance

Medtronic is approaching that elite group of dividend royalty. The medical technology company delivered its 47th consecutive year of annual dividend increases in 2024. It has grown its payment by 30% over the past five years, by 130% in the past decade, and at a 16% compound annual rate during the last 47 years. Medtronic also currently has a dividend that yields more than 3%.

The company generates significant free cash flow each year. It has committed to returning at least 50% of that money to investors, primarily through dividends. Medtronic will also opportunistically repurchase shares. It retains the rest to maintain a healthy balance sheet so that it can make accretive acquisitions as opportunities arise.

Medtronic currently has A-rated credit (A/A3), which is a very healthy rating. It ended its fiscal 2025 second quarter with $1.4 billion in cash on its balance sheet and another $6.6 billion of investments against $24.6 billion of long-term debt. Meanwhile, it produced $1.9 billion in operating cash flow during the first six months of its fiscal year and $1 billion in free cash flow after investing heavily in R&D.

The medical device maker plans to use its strong and growing free cash flow to increase its dividend and pursue smart tuck-in M&A to help complement the growth driven by its R&D investments. The company recently acquired Fortimedix Surgical to enhance its surgical and endoscopy portfolio. Future deals will help further enhance its product portfolio and innovation pipeline, enabling Medtronic to grow its earnings and dividend.

Very healthy income streams

Johnson & Johnson and Medtronic pay two of the healthiest dividends around. The healthcare giants generate lots of free cash flow to pay dividends and maintain their healthy balance sheets. They also have exceptional records of growing their dividends, which seems likely to continue in the decades ahead. That makes them great stocks to buy for those seeking sustainable dividend income.

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Matt DiLallo has positions in Johnson & Johnson and Medtronic. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Johnson & Johnson and Medtronic and recommends the following options: long January 2026 $395 calls on Microsoft, long January 2026 $75 calls on Medtronic, short January 2026 $405 calls on Microsoft, and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.