J&J Joins Dividend Hike One-Up Game (JNJ, PFE, MRK)

How many DJIA components can raise their dividend in one week?  Johnson & Johnson (NYSE: JNJ) answered that question as “Who knows, but we can make it one more!”  J&J has joined the parade of DJIA components this week that raised the dividends.

Just this week we saw a Dow Jones report calling for DJIA components to boost their dividends by about 8% on average in 2012, and J&J is announcing a hike of 7% to its quarterly payout.  J&J was one of the predicted dividend hikes in that report. The prior quarterly dividend of $0.57 per share is rising up to $0.61 per share per quarter.

The company is talking up its 2011 results, its strong financial position, and confidence in the future.  It is the 50th consecutive year that it has raised the payout.  With a $64.70 share price, the new dividend yield comes to almost 3.8% if you round higher (from 3.77%).

Today’s dividend hike makes no mention of J&J’s quality control issues and product recalls that it is still working through. The company issued a separate release noting that Alex Gorsky is formally taking over as CEO and that Bill Weldon will remain in place as a non-executive Chairman of the board of directors.

Gorsky’s “outline for the future” has a lot of good buzzwords in there… adapt faster than ever… be more agile than ever… new thinking… more cost-efficient ways of delivering health care… an expanded global presence and mindset… working smarter and harder.

Both Pfizer Inc. (NYSE: PFE) and Merck & Co. (NYSE: MRK) have raised their dividend in recent quarters for the first time in years.  J&J’s 3.8% indication compares to dividend yields of 3.9% for Pfizer and 4.4% for Merck & Co.  That may lag in yield and the company may still be working through some issues, but 50 straight years of dividends hikes is rather impressive even if the yield lags.

JON C. OGG