This Stock Makes Health Care Income Investing Simple
Investing in health care sounds simple. People always need doctors, hospitals, and medicine, right? But the reality is far from it. When you look closer, health-care investing isn’t easy at all.
Biotech stocks, for example, can soar on drug approvals, but they can also crash badly on bad trial results. Investors in this sector need to know all about how drugs are approved, keep up to date with approval processes, and so on.
For the average investor, picking the right health-care stocks could be like a guessing game. And if you are trying to generate income from these stocks, your job becomes even harder.
However, thanks to financial innovation over years, there’s a way for income investors to generate income and invest in health-care stocks. It’s through funds that are professionally managed.
One fund that stands out is abrdn World Healthcare Fund (NYSE:THW).
THW stock doesn’t just offer exposure to global health-care companies; it also offers a high dividend yield with payments made monthly.
What Does abrdn World Healthcare Fund Do?
abrdn World Healthcare Fund is a closed-end fund (CEF) that’s primarily focused on providing its investors with current income and capital appreciation by investing in health-care companies globally.
Just so you know, a CEF is an investment fund that raises a fixed amount of capital through an initial public offering (IPO) and then trades on a stock exchange like a regular stock. These funds have a limited number of shares and can trade at a discount or premium to their net asset value (NAV).
It doesn’t limit itself to just the U.S. market. Instead, the fund’s portfolio is spread across pharmaceuticals, biotech, medical device makers, and health-care service providers from around the world.
According to its latest holdings, abrdn World Healthcare Fund’s top holdings include names like Johnson & Johnson (NYSE:JNJ), UnitedHealth Group Inc (NYSE:UNH), and Abbott Laboratories (NYSE:ABT). (Source: “abrdn World Healthcare Fund,” abrdn Investments, last accessed July 2, 2025.)
A High Dividend Yield Paid Monthly
Let’s get to the part that income investors care about most: the dividend.
THW stock currently offers an annualized yield of over 13%. Even better: THW pays dividends monthly.
Instead of the traditional four payments a year paid every three months, income investors get 12 payments. Like clockwork. Each month.
Here’s how the payments look:
- $0.1167 per share paid monthly
- Annualized, it amounts to about $1.40 per share
- Based on the current price of $10.44, the mean dividend yield is 13.38%
Chart Courtesy of StockCharts.com
How is it that THW pays such a high dividend yield?
The answer: a mix of income sources.
Here’s the breakdown:
- Interest from health-care bonds
- Dividends from health-care stocks
- Capital gains from selling investments
- Return of capital (ROC)
Some investors worry when they hear “return of capital.” But in the world of CEFs, ROC is relatively the norm, allowing abrdn World Healthcare Fund’s managers to help maintain a stable monthly dividend.
You also shouldn’t overlook the track record of dividend payments here. Since its inception, THW stock has paid investors each month without much hiccup. That’s impressive, and it goes to show that future payouts should be fine as well.
Risks with Owning THW Stock
You see, no investment is risk-free, and THW stock is really no exception. But it does come with some unique risks that income investors must be aware of:
- Dividend Continuity: Maintaining a double-digit dividend yield can be challenging in the long term, and, in the event of a prolonged market downturn, abrdn World Healthcare Fund may not be able to fulfill these high payouts.
- Leverage: Generally, CEFs like abrdn World Healthcare Fund use leverage (borrow money) to amplify returns. Sadly, this can also magnify the losses in bear markets.
- Health-Care Sector Risk: Diversification is great, and this fund tries its best, but regulatory changes, drug pricing, and sudden shifts in policy could affect the whole sector and in turn impact THW stock and its distributions.
- Net Asset Value (NAV): It’s worth tracking abrdn World Healthcare Fund’s NAV over time. Historically, there have been instanced where high-yield CEFs suffer long-term NAV erosion if distributions aren’t fully covered by earnings and gains.
The Lowdown on THW Stock
If you’re seeking monthly income, global health-care exposure, and a double-digit yield, abrdn World Healthcare Fund checks a lot of the right boxes.
It offers a high yield that’s over 13%, monthly dividends, global diversification, and exposure to top health-care names.
But it must be noted: THW stock may not be for everyone. There are some risks involved here. This CEF takes on leverage and has relatively high fees compared to, say, exchange-traded funds (ETFs).