Johnson & Johnson (JNJ) is involved in our lives through its many innovative and diverse health care products.
The aging demographics of the world should provide more demand for their goods and services. How does the company look from a dividend growth stock investment standpoint?
JNJ aspires to help billions of people live longer, healthier, happier lives through the development and sale of innovative health care products.
JNJ is paying an annualized dividend of $3.36 per share, a 2.4% yield at the recent price of $140 per share.
COMPOUND ANNUAL DIVIDEND GROWTH RATE
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Dividends per share have grown modestly but consistently over the past 7 years. JNJ has increased its dividend on an annual basis for each of the past 55 years.
EARNINGS, DIVIDENDS AND PAYOUT RATIO
JNJ is a very large and stable business. JNJ is one of only two companies that maintain a triple A credit rating. This is a great sign of financial strength. You can learn more about credit ratings and how they can be used in stock and portfolio analysis by reading this recent post My Dividend Paradise over at Mr. All Things Money.
In recent years, earnings have grown at about 5-6% annually with dividend growth about that same rate. This has allowed the company to maintain a fairly consistent dividend payout ratio of about 50%. I expect JNJ to continue similar earnings and dividend growth over the next several years.
VALUATION & CONCLUSION
JNJ’s PE ratio has drifted above 20 after being in the high teens over the past few years. With moderate growth and a PE ratio that has broken out of its recent range, I would only add to my position below $120 per share. I plan to hold my existing shares for the foreseeable future.
JNJ is a member of the Dividends Deluxe and Core and Explore model portfolios. JNJ is also featured in this review of three great stocks for income, income growth and capital appreciation called the Triple Play. Also, check out the dividend deep dive analysis process while you are here.
Do you hold JNJ in your portfolio? What do think of JNJ as a dividend stock holding?
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