Despite macro headwinds, the healthcare industry continues to witness stable growth, thanks to its relatively inelastic demand. Moreover, an aging population and increasing prevalence of chronic diseases are expected to boost the healthcare industry.
In addition, President Biden signed the Consolidated Appropriations Act of 2023 a few days before the new year. The omnibus measure will provide $120.70 billion to the U.S. Department of Health and Human Services (HHS). Also, the National Institutes of Health (NIH) will be funded with $47.50 billion to increase investments in Alzheimer’s disease, cancer, and health disparities research.
Furthermore, according to Verified Market Research, the global healthcare market is anticipated to reach $665.37 billion by 2028.
Given the backdrop, we think quality healthcare ETFs Vanguard Health Care Index Fund (VHT), Invesco S&P 500 Equal Weight Health Care ETF (RYH), and VanEck Pharmaceutical ETF (PPH) might be ideal buy-and-hold options for the long haul.
Vanguard Health Care Index Fund (VHT)
VHT is a sectoral ETF launched and managed by The Vanguard Group, Inc. The fund provides exposure to firms stretching across multiple industries in the low-volatility healthcare sector.
With $17.26 billion in AUM, VHT’s top holding is UnitedHealth Group Incorporated (UNH) which has an 8.48% weighting in the fund. It is followed by Johnson & Johnson (JNJ) at 7.94% and Eli Lilly and Company (LLY) at 5.05%. The fund has a total of 415 holdings.
Over the past three months, its net inflows came in at 117.07 million. In addition, its 0.10% expense ratio is lower than the 0.53% category average.
VHT pays a $3.30 annual dividend, which yields 1.35% at the prevailing price. Its four-year average dividend yield stands at 1.45%. Its dividends have increased at a 10.3% CAGR over the past five years. Over the past three months, the fund has gained 7% to close the last trading session at $244.88.
VHT has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
VHT has an A grade for Trade and Buy & Hold and a B for Peer. It is ranked #2 out of 42 ETFs in the B-rated Health & Biotech ETFs Stocks group. Click here to see all the VHT ratings.
Invesco S&P 500 Equal Weight Health Care ETF (RYH)
RYH is an ETF launched and managed by the Invesco Capital Management LLC. The fund invests in stocks of companies operating across healthcare sectors. It invests in growth and value stocks of large-cap companies. The fund generally will invest at least 90% of its total assets in securities that comprise the underlying index.
RYH has $1.01 billion in AUM. Align Technology, Inc. (ALGN) has a 2.03% weighting in the fund as its top holding, followed by DENTSPLY SIRONA, Inc. (XRAY)at 1.90% and Organon & Co. (OGN) at 1.84%. It has 65 holdings in total.
Its net inflows came in at $14.49 million over the past three months. Its 0.40% expense ratio is lower than the 0.53% category average.
RYH pays a $1.84 dividend annually, yielding 0.63% at the current price. Its four-year average dividend yield stood at 0.56%. Its dividends have increased at a 15.6% CAGR over the past three years and 16.7% over the past five years. RYH gained 12.6 % over the past three months to close the last trading session at $292.29.
It is no surprise that RYH has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Trade and a B for Buy & Hold and Peer. RYH is ranked #18 in the same group. Click here to see all RYH ratings.
VanEck Pharmaceutical ETF (PPH)
Launched and managed by Van Eck Associates Corporation, PPH invests in stocks of companies operating across health care, pharmaceuticals, biotechnology, and life sciences sectors.
The fund has $602 million in AUM. Its top holdings are Johnson & Johnson (JNJ) with a 7.90% weighting, Novo Nordisk A/S Sponsored ADR Class B (NVO) at 5.42%, and Merck & Co., Inc. (MRK) at 5.29%. The fund has a total of 26 holdings.
Its net inflows came in at $1.92 million over the past three months. Its 0.35% expense ratio is lower than the 0.53% category average.
PPH pays a $1.20 annual dividend, which yields 1.53% at the prevailing price. Its average four-year dividend yield stands at 1.73%. PPH’s dividends increased at marginal CAGRs over the past five and three years. Over the past three months, PPH has gained 14.8% to close the last trading session at $78.69.
PPH’s POWR Ratings are consistent with its promising outlook. The ETF has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It also has an A grade for Trade, Buy & Hold, and Peer. It is ranked #9 within the same group. To access all of PPH’s POWR Ratings, click here.
VHT shares were trading at $244.81 per share on Friday afternoon, down $0.08 (-0.03%). Year-to-date, VHT has declined -1.31%, versus a 2.85% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
3 Top Health Care ETFs to Buy and Hold for the Long Haul StockNews.com
