As the stock market continues to plummet due to the implications on global trade from President Trump’s tariffs, investors need to seek out safe haven stocks to ride out the storm.

One of the best investments may be pharmaceutical stocks, which were exempted from the tariffs, and are typically seen as defensive stocks, particularly if a recession comes. People need their medications regardless of the economic climate and should offer investor portfolios downside protection. Coupled with their healthy dividends, which offer lucrative yields, make them excellent stocks to buy now.

One of the best pharma stocks to add to your portfolio is Johnson & Johnson (JNJ), a blue chip healthcare company with a long history of rewarding shareholders. It boasts a strong balance sheet, consistent cash flow generation – $16 billion annually that is targeted towards research and development – and a dividend yielding 3.4% annually that has increased for 62 consecutive years. As a result, it is a top Dividend King, or a stock that has hiked its payout for 50 years or more.

Broad Protection Against Turmoil
JNJ’s diversified portfolio includes revenue of $57 billion from therapies like its oncology therapy Darzalex, which contributed $11.7 billion in 2024, and another $32 billion from MedTech, anchoring steady cash flows.

Tariffs barely dent this. JNJ’s $55 billion U.S. investment plan over four years, shifts production stateside, and unlike retailers or manufacturers, only 36% of its $89 billion in revenue comes abroad, minimizing its exposure to any trade war.

Now JNJ stock did fall 4% on Friday, but that was unrelated to tariffs. It has faced lawsuits over talc in baby powder and had reached an agreement with plaintiffs in a class-action lawsuit where it agreed to pay out $8 billion. However, a Texas district court rejected for the third time JNJ’s bankruptcy attempt (it created a subsidiary, Red River Talc, to handle the claims through bankruptcy).

Because there is no scientific evidence that talc causes cancer, Johnson & Johnson has instead decided to fight each of the lawsuits in court. The pharma reversed around $7 billion that it had set aside for settling the lawsuits.

A Good Offense Requires a Strong Defense
JNJ stock trades at an attractive valuation with a P/E of around 15, less than its five-year average of approximately 18, and forward P/E of less than 14, below its historical average of 16.5. At a current price of $153 per share, it stands where it did back in 2021.

There are, of course, risks to any investment, and Johnson & Johnson has them, too. The talc lawsuits are a wildcard and its leading plaque psoriasis treatment Stelara, which brought in $10.4 billion last year, faces a patent cliff this year.

Yet JNJ’s scale (it has a $369 billion market cap) and pipeline of 10 drugs targeting $5 billion in peak sales, mitigate them. In a tariff-rattled market, where volatility spiked post-announcement and the markets tumbled, JNJ’s stability, dividends, and U.S.-focused pivot make it a no-brainer. It’s not flashy, but it’s a rock when chaos reigns.

— Rich Duprey

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Source: Money Morning