Healthcare giant Johnson & Johnson (JNJ) has a six-decade history of consecutive dividend growth. So, given the uncertainties surrounding the market, this fundamentally strong dividend-paying stock could be an ideal buy right now. See More Information.
Amid growing concerns about continued interest rate hikes and a recession in the economy, healthcare giant Johnson & Johnson (JNJ), with its record 60 consecutive years of dividend growth, could help secure a stable source of passive income in 2023 Let’s dive deeper and learn more about this dividend stock.
JNJ recently declared a cash dividend of $1.13 per share on common stock for the first quarter of 2023, payable on March 7, 2023.
Its annual dividend of $4.52 per share translates to a yield of 2.90% on the current market price, higher than the four-year dividend yield of 2.60%. The company’s dividend payouts have grown at a CAGR of 6% over the past three years.
JNJ maintained momentum in its segments through fiscal 2022. JNJ’s Consumer Health Segment Worldwide Adjusted Operating Sales increased 3.9% year-over-year, driven predominantly by over-the-counter (OTC) products.
Pharmaceuticals Worldwide Adjusted Operating Sales grew 6.8% year-over-year, while MedTech Worldwide Adjusted Operating Sales grew 6.1% year-over-year.
Joaquin Duato, chairman and CEO of the company, said: “As we look to 2023, Johnson & Johnson is well positioned to drive short-term growth, while investing strategically to deliver long-term value.” .
Furthermore, for the full year 2023, JNJ expects its operating sales to be between $96.90 billion and $97.90 billion, while its adjusted EPS is expected to be between $10.45 and $10.65 .
The stock dropped marginally during the day, closing the last trading session at $155.97.
Here’s what might influence JNJ’s performance in the coming months:
During the fourth quarter ended December 31, 2022, JNJ’s US sales increased 2.9% year-over-year to $12.52 billion. Its selling, marketing and administrative expenses declined 9% year-over-year to $6.51 million.
Its non-GAAP net income increased 9.5% year-over-year to $6.22 billion. The company’s non-GAAP EPS increased 10.3% from a year earlier to $2.35. The company reported adjusted net operating income per share of $2.46.
Favorable analyst estimates
Analysts expect JNJ revenue to grow 2.9% year-over-year to $97.65 billion in fiscal 2023. The company’s EPS is expected to grow 3.6% year-over-year to $10.51 in the current year. Also, it beat EPS consensus estimates for the next four quarters, which is impressive.
In addition, the company’s revenue and EPS for the fiscal second quarter ended June 2023 are expected to grow 1.7% and marginally year-over-year to $24.44 billion and $2.61, respectively.
JNJ’s 12-month gross profit margin of 67.36% is 20.9% higher than the industry average of 55.70%. The stock’s LTM EBITDA margin of 34.46% is 824.9% higher than the industry average of 3.73%. Its asset turnover ratio of 0.51% over the last 12 months is 53.6% higher than the industry average of 0.33%.
Additionally, the stock’s 12-month ROCE, ROTC and ROTA of 23.79%, 14.21% and 9.57% compared to negative industry averages of 39.86%, 22.11% and 30 .62%, respectively.
POWR ratings are promising
JNJ has an overall rating of A, which equates to a Strong Buy in our POWR rating system. POWR ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Our proprietary rating system also rates each stock against eight distinct categories. JNJ has an A Stability grade, consistent with the stock’s 24-month beta of 0.32.
In addition, it has a B grade in Quality, in line with its profitability metrics that are superior to those of the sector.
JNJ is ranked 6th out of 173 stocks in the medical-pharmaceutical industry.
Click here to access the JNJ Growth, Momentum, Value and Sentiment rankings.
JNJ continues to advance its innovative portfolio and pipeline through strategic partnerships and acquisitions.
In addition, the company is committed to returning value to its shareholders through attractive dividends. So the stock could be a solid buy.
Like Johnson & Johnson (JNJ) Stack against your peers?
JNJ has an overall POWR rating of A. Check out these other stocks in the med-pharmaceuticals industry with an A (Strong Buy) rating: Novo Nordisk A/S ADR (NVO), Bristol-Myers Squibb Co. (BMY) and Novartis AG ADR (NVS).
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JNJ shares were unchanged in premarket trading on Monday. Year-to-date, the JNJ is down -10.86%, versus a 4.46% rise for the benchmark S&P 500 during the same period.
About the Author: Kritika Sarmah
Her interest in risk instruments and passion for writing made Kritika a financial analyst and journalist. She earned her Bachelor of Commerce degree and is currently pursuing the CFA program. With its fundamental approach, it aims to help investors identify untapped investment opportunities.
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