Johnson & Johnson Offers Investors Long-Term Dividend Income, Share Price Advances Against Recent Market Trend (JNJ)
By: Ned Piplovic,
At a time when investors are looking to divest from the declining market sectors, Johnson & Johnson (NYSE:JNJ) offers investors a share price that is rising against the recent decline of overall markets, as well as a dividend income that has been rising every year for more than five decades.
With 56 consecutive years of rising dividend income, Johnson & Johnson earned the right to be included in the selective group of companies that carry the Dividend Aristocrats classification. Dividend Aristocrats are a group of 52 S&P 500 companies whose market capitalization exceeds $3 billion and have a record of raising dividend income payouts for at least 25 consecutive years. Furthermore, JNJ’s record of consecutive dividend income payout hikes places the company in an even more exclusive group called Dividend Kings, which includes only 26 companies that have boosted their annual dividends for at least 50 consecutive years.
In addition to rewarding its shareholders with steady dividend income growth, the company also has a long record of asset appreciation with minimal volatility and only one price correction of more than 25%. After declining in the first half of the trailing 12 months, the company’s share price reversed direction and has been rising since bottoming out in late May 2018. While the overall financial markets have taken significant losses since the beginning of October, JNJ’s share price dipped 6.3% after September 21, 2018, but reversed course on October 11, recovered all those losses by November 11, 2018, and continues to advance.
The share price’s 50-day moving average (MA) broke above the 200-day MA in early September and has continued to rise since then. Additionally, the share price has been trading above both moving averages since the beginning of November 2018. Both indicators point to a potential continuation of asset appreciation.
Continuing the trend of beating analysts’ estimates in the previous three quarters, Johnson & Johnson’s third-quarter earnings per share of $2.05 advanced 7.9% above the same period last year and exceeded the $2.03 consensus estimate. The most important revelation was that JNJ’s 6.1% organic sales growth — excluding the impact of acquisitions and divestitures – remains above the average growth rate of peers in the Pharmaceutical segment.
The company’s next ex-dividend date will occur on November 26, 2018. All shareholders of record prior to that date will receive the next round of dividend income distributions on the upcoming pay date, which is scheduled for December 11, 2018.
Johnson & Johnson (NYSE:JNJ)
Founded in 1885 and headquartered in New Brunswick, New Jersey, Johnson & Johnson researches, develops, manufactures and sells health care products worldwide. The company operates through three segments: Consumer, Pharmaceutical and Medical Devices. The Consumer segment offers baby care, oral care, women’s health products and beauty products under multiple brands, which include Johnson’s, Listerine, Clean & Clear, Stayfree, Carefree, Band-Aid, Neosporin, Neutrogena and more. Additionally, the company manufactures and distributes Tylenol, Sudafed, Benadryl, Zyrtec, Motrin IB, Pepcid and other over-the-counter medicines. Through its Pharmaceutical segment, the company offers various products in the areas of immunology, infectious diseases and vaccines, neuroscience, oncology, cardiovascular and metabolic diseases. The Medical Devices segment provides orthopedic, general surgery, sterilization and disinfection and electrophysiology products, as well as disposable contact lenses.
The December payout of $0.90 is the last quarterly installment of the company’s $3.60 annualized dividend in 2018. The share price growth over the past six months has suppressed the dividend yield from 2.9% to the current 2.5% value. However, JNJ’s current 2.5% yield is nearly fourfold above the 0.64% average yield of the overall Healthcare sector and 34% higher than the simple average of the company’s peers in the Major Drug Manufacturers market segment. Over the past two decades, the company has managed to enhance its annual dividend income payout more than sevenfold, which corresponds to an average growth rate of 10.4% per year.
As already indicated, the share price has been rising steadily since reversing the downtrend in late May 2018. Since the 52-week low, the share price advanced 21% and closed on November 16, 2018, at $146.23, which was just 2.5% below the $148.14 peak from January 22, 2018. Additionally, the share price is up more than 50% over the past five years.
The company’s share price recovery over the past six months combined with the dividend income distributions to deliver a 7% total return over the past year. The total returns over the past three and five years were 55% and 80%, respectively.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.