A strong October jobs report suggests the US economy is still running hot, and the Federal Reserve may keep interest rates high. Investors are looking at defensive, dividend-paying healthcare stocks as a result. Three names stand out. Royalty Pharma, with a market cap of $38.6 billion, earns $2.6 billion in revenue from biopharmaceutical royalties, all of it from the US. Gilead Sciences, valued at $207.0 billion, generates $31.0 billion in revenue, of which about $22.8 billion comes from the US. Its HIV franchise supports its payout, though acquisitions are expected to cause a 2026 loss per share. Stryker, valued at $124.1 billion, earns about $9.9 billion from orthopaedics and $16.4 billion from MedSurg and neurotechnology. Steady demand for surgery supports its income, and its Mako robotics platform is expanding.

Stryker missed Wall Street expectations in the third quarter of 2026, even as sales rose 7.6% year on year to $6.52 billion. Analysts had expected $6.62 billion. Adjusted earnings of $3.52 per share fell short of the $3.55 consensus. The medical technology company blamed a slowdown in US hip and knee replacements, citing patient affordability, more insurance pre-authorization denials, and problems after a new SAP system rollout. Operating margin fell to 15.9% from 18.7% a year earlier. Stryker cut its full-year adjusted earnings guidance to $14.85 per share at the midpoint, down 1.2%. It expects softness to continue, but is counting on product launches, robotics, and recent acquisitions, including ZuriMED, to drive growth. Shares trade at $296.17, down from $311.75 before the results.

Stryker shares fell about 10% to $279.98 before the open on Friday, after the medical device maker missed third-quarter estimates and cut its 2026 sales guidance. The stock was already down about 20% this year. Adjusted earnings per share were $3.52 against $3.55 expected. Revenue was $6.52 billion against $6.62 billion expected, up 7.6%. Stryker now expects 2026 organic sales growth of 6.5% to 7.0%, down from 8.3% to 9.3%. Its adjusted EPS guidance fell to $14.80 to $14.90 from $14.95 to $15.10. Chief executive officer Kevin Lobo said the Mako RPS hip and knee system is "off to a slow start." Spencer Stiles succeeds him and will issue the 2027 guidance early next year.