Last Update 3/10/25
Johnson & Johnson (NYSE: JNJ) has been a household name for generations, known for everything from baby powder to life-saving pharmaceuticals. But for investors, JNJ is more than just a brand—it’s a steady, time-tested income powerhouse.
With a market cap of over $400 billion, Johnson & Johnson is a dominant player in the healthcare industry, spanning pharmaceuticals, medical devices, and consumer health products. Following the spinoff of Kenvue, its consumer health segment, JNJ has sharpened its focus on high-margin businesses, strengthening its long-term growth potential.
For those who prioritize dividends, this stock has been a staple. With a history of uninterrupted payouts spanning more than six decades, it has earned a reputation as one of the most reliable dividend-paying stocks in the market. Now, let’s dive into what makes JNJ’s dividend stand out, its financial health, valuation, and the risks investors should consider.
🔑 Key Dividend Metrics
📌 Dividend Yield: 2.96%
📌 Annual Dividend: $4.96 per share
📌 Payout Ratio: 84.8%
📌 5-Year Average Yield: 2.75%
📌 Consecutive Dividend Growth: 61 years
📌 Most Recent Increase: 5.3%
📌 Ex-Dividend Date: February 18, 2025
📌 Next Payment Date: March 4, 2025
Dividend Overview
JNJ is the definition of a dividend powerhouse. It’s part of an elite group of companies that have increased their dividend for over six decades straight, making it a rare find for income investors. At a 2.96% yield, the stock currently offers a slightly higher payout than its five-year average of 2.75%.
The payout ratio, sitting at 84.8%, is a bit on the high side. This number suggests JNJ is returning a large portion of its earnings to shareholders. While some might see this as a potential red flag, the company’s strong cash flow and predictable earnings make the dividend relatively safe for now.
The next dividend payment is scheduled for March 4, 2025, and to qualify, investors had to own the stock before February 18, 2025. Given JNJ’s long-standing history, another dividend increase can be expected in the coming months.
Dividend Growth and Safety
JNJ has been increasing its dividend for an impressive 61 years in a row, a testament to its financial resilience. The most recent increase of 5.3% is in line with its historical trend, where annual raises typically land between 5-6%.
Why the Dividend Growth Looks Sustainable
- Strong cash flow – The company generates $24.27 billion in operating cash flow annually, giving it plenty of room to keep dividends flowing.
- Consistent earnings power – JNJ is a dominant force in pharmaceuticals and medical devices, both of which provide steady revenue.
- Resilient business model – Healthcare is a necessity, meaning JNJ isn’t as vulnerable to economic downturns as other sectors.
What Investors Should Watch
- The payout ratio is creeping toward the higher end, which means future dividend growth might slow if earnings don’t keep up.
- The Kenvue spinoff removed a steady revenue stream, which could temporarily impact cash flow until the company fully adjusts to its new structure.
Despite these factors, JNJ remains one of the safest dividend stocks out there, thanks to its ability to generate cash and its long history of navigating economic cycles.
Chart Analysis
The stock chart for Johnson & Johnson (JNJ) shows some interesting developments, especially when looking at price action, moving averages, volume, and momentum indicators. The recent trend suggests a shift in sentiment, but let’s break it down further.
Moving Averages and Trend
The 50-day simple moving average (SMA) has recently turned upward and is now approaching the 200-day SMA. This is an important technical event, as it suggests short-term momentum is improving. If the 50-day SMA crosses above the 200-day SMA, it would form a golden cross, which is typically a bullish signal indicating a potential continuation of the uptrend.
Looking at the overall price movement, JNJ appears to have come out of a period of weakness, where it was trading well below both moving averages for several months. The stock bottomed out and has since staged a strong rally, breaking above the 50-day SMA and now pushing toward the 200-day SMA.
Volume Activity
Volume levels show a clear increase during the recent uptrend, which adds credibility to the move. Higher volume during rallies suggests that institutional investors are stepping in and accumulating shares. This is a positive sign because it indicates stronger conviction behind the price movement.
There were some noticeable spikes in volume during the downward trend as well, suggesting that there was likely some capitulation before the stock found its recent bottom. The fact that volume has remained relatively elevated as the stock recovers is a positive signal.
Relative Strength Index (RSI)
The RSI, which measures momentum, has been climbing steadily. It recently moved above the 50 level, indicating that bullish momentum is strengthening. While it hasn’t reached the overbought zone yet, it’s something to watch in the coming weeks. If the RSI moves above 70, it could signal that the stock is overextended in the short term and due for a pullback.
On the flip side, if the RSI remains in the 50-70 range, it would suggest that the stock is maintaining strong momentum without becoming overheated. This would be an ideal scenario for those looking for a sustainable uptrend.
Price Action and Recent Candles
Looking at the most recent price action, the last five trading sessions have shown a series of higher highs and higher lows, which is a textbook sign of an uptrend. The wicks on the candles suggest that there has been some resistance around current levels, but buyers are stepping in on dips to support the stock.
The most recent close at 166.69 shows that the stock is pushing toward its recent highs, with intraday volatility creating a bit of a battle between buyers and sellers. However, the overall structure remains bullish, as the stock continues to close near its highs rather than selling off aggressively.
Key Levels to Watch
With JNJ trading near its recent resistance, a breakout above 168.50-170 could signal further upside. If the stock clears this level with strong volume, it could open the door for another leg higher.
On the downside, support appears to be forming around the 155-157 range, which coincides with the rising 50-day moving average. If the stock pulls back, this level would be an important test to see if buyers step in again.
Analyst Ratings
Johnson & Johnson (JNJ) has recently been the focus of multiple analyst evaluations, presenting both upgrades and downgrades that highlight differing perspectives on the company’s outlook. Analysts remain divided on the stock, with some citing strong fundamentals while others point to potential risks.
📈 Upgrades
🔹 Royal Bank of Canada (RBC) – Upgraded to outperform, price target $181
RBC maintained an optimistic stance on JNJ, citing the company’s strong financial stability and resilient revenue streams across its pharmaceutical and medical device segments. Analysts believe the company’s post-Kenvue restructuring will allow it to focus more on high-margin areas, supporting long-term growth.
🔹 Argus Research – Upgraded to strong buy
Analysts at Argus raised their outlook on JNJ due to its consistent earnings power and ability to weather economic downturns. The firm pointed to growth potential in immunology and oncology, where the company has been making significant strides with new drug developments.
📉 Downgrades
🔻 Stifel Nicolaus – Downgraded to hold, price target lowered to $155
Stifel expressed concerns over headwinds in JNJ’s pharmaceutical segment, including increased competition in key drug categories and uncertainties surrounding ongoing litigation risks related to talc lawsuits. The firm believes these factors could limit upside potential in the near term.
🔻 Raymond James – Maintained outperform, price target lowered to $165
While still optimistic about JNJ’s long-term prospects, Raymond James reduced its price target, citing competitive pressures and market dynamics impacting some of JNJ’s major revenue-generating product lines. The firm believes growth could moderate in the next few quarters before re-accelerating.
🎯 Consensus Price Target
📌 $171.33 – The average 12-month price target among 18 analysts suggests modest upside potential from current levels. While some firms have trimmed their targets due to legal uncertainties and industry competition, the overall sentiment remains cautiously optimistic given JNJ’s strong cash flow generation and resilient business model.
Analyst opinions reflect both the opportunities and challenges JNJ faces as it transitions into a more focused healthcare company. While near-term risks remain, the company’s long-standing dividend history and stable earnings base continue to attract long-term investors.
Earning Report Summary
Johnson & Johnson recently reported its latest quarterly and full-year financial results, showing a mix of growth and some areas of slowdown. The company continues to navigate challenges while maintaining strong performance in key areas of its business.
Fourth-Quarter Performance
Revenue for the quarter came in at $22.52 billion, reflecting a solid 5.3% increase compared to the same period last year. While sales showed healthy growth, net income dropped to $3.43 billion, down about 17% from the previous year. Earnings per share (EPS) also took a hit, landing at $1.41, compared to $1.70 in the prior quarter.
Full-Year 2024 Highlights
For the full year, Johnson & Johnson brought in $88.82 billion in sales, marking a 4.3% increase from 2023. Net income for the year totaled $14.07 billion, up 5.6%, with EPS rising 11.3% to $5.79. Despite some earnings pressure in the most recent quarter, the company’s overall year-over-year growth remains steady.
Business Segment Performance
- Pharmaceuticals saw a 4.4% revenue increase in the fourth quarter. Cancer treatments were a standout performer, with Darzalex, a drug used for multiple myeloma, seeing over 20% growth, generating more than $3 billion in sales.
- Medical devices continued to gain momentum, with the MedTech segment growing 6.7% thanks to increased demand for surgical products and interventional technology.
Looking Ahead to 2025
Johnson & Johnson provided its outlook for the coming year, expecting total sales to land between $89.2 billion and $90 billion. This projection is slightly below what some analysts had anticipated. The company also forecasted adjusted earnings per share in the range of $10.50 to $10.70, suggesting expectations for moderate growth.
While the latest quarter showed some softness in earnings, the company remains on solid ground. The pharmaceutical and medical device businesses continue to drive growth, and management is optimistic about their ability to navigate the evolving healthcare landscape. With a strong pipeline of new products and steady demand for existing ones, J&J is positioned to stay a leader in the industry.
Financial Health and Stability
Looking under the hood, JNJ’s financials remain strong, though the company has taken on some debt following recent strategic moves.
Cash and Debt Levels
- Cash on Hand: $24.52 billion
- Total Debt: $37.83 billion
- Debt-to-Equity Ratio: 52.92%
JNJ has a current ratio of 1.11, which means it has more than enough liquidity to cover short-term obligations. A return on equity of 20.06% shows that management is using capital effectively, while an 8.13% return on assets suggests a healthy level of profitability.
One point of concern is that last quarter’s earnings declined by 15.3% year-over-year. While this isn’t a trend yet, it’s something dividend investors should keep an eye on. Long-term sustainability hinges on JNJ’s ability to return to steady earnings growth.
Valuation and Stock Performance
JNJ’s stock is currently trading around $167.70, near its 52-week high of $169.99. The stock has rebounded nearly 19% from its low of $140.68, showing that investor sentiment has been improving.
Key Valuation Metrics
- Trailing P/E: 28.79
- Forward P/E: 15.72
- PEG Ratio: 1.13
- Price-to-Book: 5.61
JNJ’s forward P/E of 15.72 suggests that expectations for future earnings growth are reasonable. The PEG ratio of 1.13 indicates the stock isn’t excessively priced compared to its growth prospects. Historically, JNJ is a stock that investors prefer to buy on dips rather than chasing at highs. While it’s not overly expensive at current levels, it might be worth waiting for a more attractive entry point.
Risks and Considerations
Even for a company as solid as JNJ, there are always risks that investors should keep in mind.
Legal Challenges
One of the biggest overhangs for JNJ is its involvement in lawsuits related to talc-based products. The company has already set aside billions to cover potential settlements, but ongoing legal battles could continue to create uncertainty.
Post-Kenvue Adjustments
With Kenvue now operating independently, JNJ has lost a steady consumer revenue stream. While this shift allows the company to focus on pharmaceuticals and medical devices, it also means there’s an adjustment period as JNJ reallocates resources.
Pharmaceutical Competition
JNJ’s pharmaceutical segment is highly profitable, but it isn’t without challenges. Patent expirations and increasing competition from generic drugs could pressure margins in the future. The company’s ability to bring new drugs to market will be critical in maintaining long-term growth.
Payout Ratio Concerns
With the payout ratio creeping toward 85%, future dividend hikes may not be as aggressive unless earnings growth accelerates. While JNJ’s financial position remains strong, dividend investors should keep an eye on how much of its profits the company continues to distribute.
Final Thoughts
JNJ remains a cornerstone stock for dividend investors, providing a combination of yield, reliability, and steady growth. With an uninterrupted history of dividend payments and increases for more than 60 years, it continues to be one of the most dependable names in the market.
Why It’s a Strong Dividend Stock
- Unmatched track record of dividend growth
- A business model that weathers economic downturns
- Strong free cash flow that supports dividend payments
- A fair valuation with a forward P/E of around 15
What to Watch Moving Forward
- The high payout ratio could limit future dividend increases
- Legal risks from ongoing lawsuits
- Adjustments following the Kenvue spinoff
JNJ may not offer the highest yield, but for investors looking for a dependable income stock with a long history of rewarding shareholders, it remains one of the best long-term options available. While valuation matters, those who hold JNJ for the long run continue to benefit from its steady dividend growth and financial stability.
Recent Comments