Johnson & Johnson: A Dividend King with Earnings Growth


    Ask any long-term successful investor to describe the best stock investment for the long haul. Many will say something like this: Invest in a blue chip company that pays regular and generous dividends. And if possible, find the ones with growing earnings.

    In assessing the current market landscape, Johnson & Johnson (JNJ) may be just one of these types of investments. A recent article appearing in Seeking Alpha outlines the reasons why this may be true.

    A Dividend King

    Dividend Kings are those blue chip stocks that have increased their dividend for the last fifty or more years. With a current dividend yield of 2.57%, JNJ is a perennial hold-forever stock that promises to keep on giving. The maker of iconic products such as Listerine, Benadryl, Zyrtec, Tylenol, Sudafed, Band-Aid and others, this health-care company rakes in the cash to amply support its generous dividend.

    The Case for Growth

    In the first quarter of 2018, JNJ generated earnings of $2.06 per share on revenues of over $20 billion. These numbers easily beat most analysts expectations. The revenue was diversified broadly, with consumer products up 5.3%, drugs up 19.4% and medical products ahead by 7.5%.

    JNJ has a strong pipeline of drugs in development, which should maintain its growth prospects going forward. To augment its growth, the firm makes frequent acquisitions. For example, JNJ recently bought Actelion, a stand-alone drug research and development company. JNJ management expects to see earnings growth of 2 to 3 percent going forward as a result of this purchase.

    Overall Assessment

    According to the Seeking Alpha article, JNJ is a “Sleep-well-at-night dividend stock. It is an industry leader and a global giant.” With a generous dividend and top-notch prospects for continued growth, JNJ remains a quality company to consider for dividend growth investors.


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