Wall Street Is Bracing for the Fed's Next Move on Rates. These 3 Stocks Win Either Way.

Bond yields are rising, inflation remains above the Federal Reserve's target, and there has already been one Fed rate hike. Wall Street is bracing for further rate increases, making life more expensive for both companies and consumers. Consumers, notably, are already tightening their budgets.

There's one sector where these dynamics are less meaningful: Healthcare. A rate hike probably won't change your desire to live a healthy life. If you need medical care, you are highly likely to get that care regardless of the cost. If you are concerned about rate hikes, however, these three healthcare stocks may be worth a particularly close look: Eli Lilly (NYSE: LLY), Medtronic (NYSE: MDT), and Johnson & Johnson (NYSE: JNJ). Here's why.

Eli Lilly is building off its GLP-1 success

Eli Lilly is the leading maker of GLP-1 weight-loss drugs. Although that's a risk, since these medications now account for nearly 66% of the company's top line, it is also a huge opportunity. And Eli Lilly isn't wasting the opportunity. For starters, weight loss is a huge market, and demand for GLP-1 drugs is likely to be strong even if rates rise. But the big story is that Eli Lilly is using the huge amounts of cash it is generating from GLP-1 drugs to diversify its drug pipeline.

For example, in August 2026, Eli Lilly agreed to acquire Merida Biosciences, which operates in the autoimmune and allergic disease space. In July 2026, it agreed to buy AtaiBeckley, which works in the mental health space. And in May, Eli Lilly acquired three companies, quickly building a division in the infectious-disease space. So not only does this drug maker look resilient to rate increases due to its GLP-1 weight-loss drugs, but it is also quickly building the foundation for even more growth in the future.

Medtronic has turned the corner

Medtronic is a low-risk turnaround story. Over time, the medical device giant's business got bloated, and growth slowed. Management looked at the situation and took action, slimming down the business to focus on its most profitable and fastest-growing divisions. And it began investing more heavily in new products. The company appears to have turned the corner, but Wall Street remains in a show-me mood. That's an opportunity for dividend investors, noting the stock's above-market 3.3% yield.

To put some number on the turnaround, Medtronic's sales grew 8.4% in fiscal 2026. That was the fastest pace of growth in a decade. But it gets better: the first-quarter 2027 sales advance was nearly 14%. The growth is being aided by new products finally hitting the market, including the company's Hugo surgical robot. Notably, despite a few years of slow growth, the company continued to increase its dividend each year. The streak is up to 49 years, one year shy of Dividend King status. Even risk-averse investors should probably find Medtronic of interest today.

Johnson & Johnson is a diversified Dividend King

Johnson & Johnson is a healthcare giant, operating in both the pharmaceutical and medical device niches. Like Medtronic, it has been slimming down, spinning off or selling divisions so it can focus on its most profitable and fastest growing businesses. It is a great option for investors who desire broad exposure to the healthcare sector and like to own historically well-run businesses.

The proof of J&J's successful history is found in its dividend, which has been increased annually for over six decades. It is a full-on Dividend King, and then some. The yield is 2%, which is notably higher than the market, but not as attractive as what you'd get from Medtronic. However, the added diversification from this historically resilient healthcare giant will likely be appealing to many investors.

You don't have to wait for a rate hike

The investment thesis behind Eli Lilly, Medtronic, and J&J isn't based on a rate hike. These are well-run businesses with strong opportunities for growth in just about any environment. You may want to take a deep dive now to get ahead of a rate hike, or simply to own some of the best-run healthcare companies in the world.

Reuben Gregg Brewer has positions in Medtronic. The Motley Fool has positions in and recommends Eli Lilly and Medtronic. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.