2 Beaten-Down Dividend Stocks to Buy in 2025

Dividend stocks are great for various reasons, and it's even better to invest in them while they are going through a rough patch, provided there are good reasons to believe they will recover. This description fits several dividend stocks on the market, among which are CVS Health (NYSE: CVS) and Johnson & Johnson (NYSE: JNJ). Although these two healthcare leaders have had their share of headwinds that have led to market-lagging performances, they have plenty of qualities dividend investors will like. Let's dig in.

1. CVS Health

CVS Health has dealt with several issues in the past few years. First, sales of coronavirus-related products aren't as strong as they once were. Second, and more importantly, CVS Health's Medicare Advantage (MA) plans are getting far more business than anticipated, and the company is struggling to contain costs. So, revenue and earnings growth haven't been strong for the healthcare giant. In the third quarter, CVS Health's top line increased by 6.3% year over year to $95.4 billion.

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The company's adjusted earnings per share declined to $1.09, from the $2.21 reported in the year-ago period. It's no wonder investors aren't too excited about the stock right now. However, CVS Health's management is making plans to fix the company's MA business in 2025. The company said it will implement initiatives which, although they could lead to losing up to 10% of its MA customers, will help improve margins and efficiency. Further, despite its current issues, CVS Health's long-term strategy looks attractive.

The company's ecosystem includes health insurance, primary care, a new division that will develop biosimilar drugs, and, of course, one of the largest pharmacy chains in the U.S. CVS Health's goal is to hold patients' hands through their care journey by offering much of what they need in-house. The demand for the company's services will only increase over the long run due to several factors, including an aging population. And considering CVS Health has already become an integral part of the lives of thousands of patients, its prospects remain strong.

Familiarity and trust are important for any company in any industry. CVS Health has built trust with many of its customers and the communities in which it operates. What about CVS Health's dividend? It currently offers a forward yield of 5.78% -- compared to the S&P 500 index's yield of 1.27%. CVS Health has increased its dividend by 90% in the past decade and, despite its financial headwinds, boasts a conservative payout ratio of 37.54%. So, CVS Health remains a solid income stock to buy in 2025 and beyond.

2. Johnson & Johnson

Johnson & Johnson is still facing many legal battles, including those related to its talc-based products, which, plaintiffs claim, gave them cancer. Further, recent regulatory changes in the U.S. will allow the government to negotiate the prices of some drugs, including some that Johnson & Johnson markets, leading to lower revenue from these products. These problems are real and worth monitoring. However, Johnson & Johnson has been a picture of stability for decades.

The company generates consistent revenue and profits thanks in large part to a vast portfolio of medicines. Johnson & Johnson's lineup features many blockbusters. Thanks to a deep pipeline, it earns brand-new approval or label expansions practically every quarter. Johnson & Johnson's medical device business is also strong. The company develops and markets devices across several therapeutic areas, including vision, surgery, orthopedics, and interventional solutions.

Because it sells lifesaving drugs and medical devices, the company's business tends to handle recessions better than most. And Johnson & Johnson is highly adaptable, which is how it has been successful for decades despite many regulatory changes along the way. The company can get around its regulatory problems in many different ways. Further, its balance sheet is rock solid. It has a higher credit rating than the U.S. government itself. Lastly, Johnson & Johnson is a Dividend King with an active streak of 62 consecutive years of dividend increases.

The company's forward yield tops 3.49%, and its payout ratio stands at just 33.48%. Johnson & Johnson has one of the more secure dividends on the market, in my view. It is an excellent pick for income-seeking investors.

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Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool recommends CVS Health and Johnson & Johnson. The Motley Fool has a disclosure policy.