Exploring the Sustainability and Growth of Johnson & Johnson's Dividends
Johnson & Johnson (JNJ, Financial) recently announced a dividend of $1.24 per share, payable on 2024-06-04, with the ex-dividend date set for 2024-05-20. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Johnson & Johnson's dividend performance and assess its sustainability.
What Does Johnson & Johnson Do?
Johnson & Johnson is the world's largest and most diverse healthcare firm. It operates through three divisions: pharmaceuticals, medical devices and diagnostics, and consumer health. The pharmaceutical and medical devices segments account for approximately 80% of sales and are the primary drivers of the company's cash flows. These segments focus on areas such as immunology, oncology, neurology, and cardiology, among others. The consumer health division, which includes products like baby care and over-the-counter drugs, is being spun off into a new entity named Kenvue. Over half of Johnson & Johnson's revenue is generated in the United States.
A Glimpse at Johnson & Johnson's Dividend History
Johnson & Johnson has a long-standing reputation for consistent dividend payments, having done so since 1963. The dividends are issued quarterly. Notably, the company has increased its dividend annually since 1963, earning it the prestigious title of a Dividend King—a designation for stocks with at least 50 consecutive years of dividend increases.
Breaking Down Johnson & Johnson's Dividend Yield and Growth
Currently, Johnson & Johnson boasts a trailing dividend yield of 3.08% and a forward dividend yield of 3.21%, indicating expected dividend increases over the next 12 months. Over the past three years, the annual dividend growth rate was 5.70%, which slightly increased to 5.80% over five years, and reached 6.10% over the past decade. As of today, the 5-year yield on cost for Johnson & Johnson stock is approximately 4.08%.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio is a critical metric for assessing dividend sustainability. Johnson & Johnson's payout ratio stands at 0.47, suggesting a balanced approach between distributing earnings as dividends and retaining funds for future growth. The company's profitability rank is 8 out of 10, reflecting strong earnings capabilities, bolstered by consistent positive net income over the past decade.
Growth Metrics: The Future Outlook
Johnson & Johnson's growth rank is also 8 out of 10, indicating robust growth prospects. However, its 3-year revenue growth rate of 2.50% slightly lags behind 62.87% of global competitors. The 3-year EPS growth rate of 21.10% also trails 35.4% of global peers. Additionally, the 5-year EBITDA growth rate of 9.80% is lower than 50.57% of global competitors, suggesting mixed performance in growth metrics.
Conclusion: Evaluating Johnson & Johnson's Dividend Prospects
Johnson & Johnson's dividends are supported by a strong payout ratio, consistent profitability, and a history of dividend growth. While some growth metrics show areas for improvement, the overall financial health of the company supports the ongoing payment and potential increase of dividends. For investors seeking dividend-paying stocks, Johnson & Johnson remains a compelling candidate. For further exploration of high-dividend yield opportunities, consider using the High Dividend Yield Screener available to GuruFocus Premium users.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
