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The healthcare sector has always been one of the most promising sectors, as new healthcare services are in high demand. Many investors prefer investing in the healthcare sector due to high profitability in the business. In recent years, this sector has had higher returns than any other sector that are followed by S&P. Therefore, we decided to screen for the top five healthcare companies with substantial dividends and a maximum P/E ratio of 20. All of the following companies offered a minimum 3% dividend yield and have a minimum market capitalization of $300 million. Data is derived from finviz.

While there are hundreds of healthcare firms listed in NYSE, only the following healthcare utilities fit into this criteria:

Abbott Laboratories (ABT): Engaging in discovering, developing, manufacturing and selling healthcare products over the world, Abbott Laboratories was founded in 1888. The market capital of ABT is $76.40 billion, and P/E ratio is 16.62 while forward P/E ratio is 9.97. The company had an EPS growth of 6.64% over the last five years. With a net profit margin of 13.16%, Abbott Laboratories paid a dividend yield of 3.89% last year. Recent dividend payments of ABT per share are as follows:

Jan 12, 2011

$0.44

Oct 13, 2010

$0.44

Jul 13, 2010

$0.44

Apr 13, 2010

$0.44

Johnson & Johnson (JNJ): JNJ is a world-renowned firm that researches and develops various products in the healthcare field over the globe. Pharmaceutical Consumer, Medical Devices, and Diagnostics are the three main workspaces of the firm. JNJ has a market capitalization of $163.02 billion and a P/E ratio of 12.45, while forward P/E ratio is 11.62. JNJ had an EPS growth of 7.35% during the last five years. Net profit margin in 2010 was 21.65%, and the company offered a dividend yield of 3.63% over the same period. Recent dividend payments of JNJ per share are as follows:

Feb 25, 2011

$0.54

Nov 26, 2010

$0.54

Aug 27, 2010

$0.54

May 27, 2010

$0.54

Bristol-Myers Squibb Company (BMY): As a global biopharmaceutical company, Bristol-Myers Squibb focuses on areas of unmet medical needs like cancer, HIV/AIDS, mental illness and cardiovascular diseases. The market capital of BMY is $45.11 billion, and P/E ratio is 14.78. Forward P/E ratio is 12.84. The company had an EPS growth of 4.3% over the last five years. In 2010, BMY’s net profit margin was 15.92% and dividend yield was 4.99%. Recent dividend payments of BMY per share are as follows:

Mar 30, 2011

$0.33

Jan 5, 2011

$0.33

Sep 29, 2010

$0.32

Jun 30, 2010

$0.32

Eli Lilly & Co (LLY): Eli Lilly, a worldwide company founded in 1876 and based in Indianapolis, Indiana, is in the business of improving, fabricating and selling pharmacy products. The market capital of LLY is $40.51billion and P/E ratio is 7.62 while forward P/E ratio is 9.53. LLY had an EPS growth of 20.13% over the last five years. With a net profit margin of 21.97% and a dividend yield of 5.60%, LLY is a superb stock for dividend lovers. Recent dividend payments of LLY per share are as follows:

Feb 11, 2011

$0.49

Nov 10, 2010

$0.49

Aug 11, 2010

$0.49

May 12, 2010

$0.49

PetMed Express Inc. (PETS): PetMed is a company which operates 1-800-PetMeds and sells prescription pet medications and other health products for animals. The market capital of PETS is $354.46M and P/E ratio is 15.74 while forward P/E ratio is 16.57. Petmed is a fast growth company with an EPS growth of 27.74% over the last five years. Last year’s dividend was 3.18% and the company had a net profit margin of 9.87%. Recent dividend payments of PETS per share are as follows:

Feb 9, 2011

$0.125

Nov 9, 2010

$0.125

Aug 11, 2010

$0.125

May 12, 2010

$0.10

Note that none of the companies reduced its dividends. That is a good sign for the future of healthcare companies. If healthcare is not your favorite sector, check out the top 6 oil & gas companies with excellent dividends.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Top 5 Healthcare Companies Paying Excellent Dividends