Investing

Johnson & Johnson Just Paid Investors: Here's How Much They Received

Trey Thoelcke

Published: December 10, 2024 10:15 am

Key Points

• Johnson & Johnson (NYSE: JNJ) just rewarded its shareholders again with a quarterly dividend.
• As a Dividend King, it is the epitome of a steady and reliable stock.
• Take this quiz to see if you’re on track to retire. (sponsored)

Johnson & Johnson (NYSE: JNJ) is rewarding its shareholders once again with a quarterly dividend of $1.24, payable on Tuesday, Dec. 10. That is the same as in the prior quarter. The stock has underperformed the broader markets in the past few years. However, the dividend payment underscores the management’s commitment to delivering consistent value to investors.

Why Investors Like Dividends

Investors favor dividend stocks for two main reasons. The first is that they offer enticing total return potential. Total return is a comprehensive measure of investment performance that includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation. It is one of the most effective ways to boost the prospects of overall investing success.

Dividend stocks can also provide investors with a steady, reliable stream of passive income. Passive income is money that is earned with little to no ongoing effort, usually from assets that generate cash flow. This income can come from a variety of sources, including stock dividends. Generating passive income is a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

A Dividend King

Johnson & Johnson has a reputation for having a stable and dependable growing dividend. The company has increased its dividend annually for 62 years. That is well more than the 25 straight years of growth it takes for an S&P 500 member to become a Dividend Aristocrat. It makes the stock a Dividend King, a member of that exclusive group of stocks that have at least 50 consecutive years of dividend growth.

Since 2004, the Johnson & Johnson dividend has grown about 417%. The current dividend yield is 3.3%, which is more than the average yields of the pharmaceutical industry and health care sector. The share price has grown by about 177% since 2004 as well, offering investors growth along with the income.

Johnson & Johnson, the Company

Johnson & Johnson researches, develops, manufactures, and sells various health care products worldwide.

Its Innovative Medicine segment offers products for various therapeutic areas, such as:

• Immunology, including rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis
• Infectious diseases, comprising HIV/AIDS
• Neuroscience, consisting of mood disorders, neurodegenerative disorders, and schizophrenia
• Oncology, such as prostate cancer, hematologic malignancies, lung cancer, and bladder cancer
• Cardiovascular and metabolism, including thrombosis, diabetes, and macular degeneration
• Pulmonary hypertension, comprising pulmonary arterial hypertension

The MedTech segment provides Interventional Solutions. These include:

• Electrophysiology products to treat heart rhythm disorders
• The heart recovery portfolio, which includes technologies to treat severe coronary artery disease requiring high-risk PCI or AMI cardiogenic shock
• Neurovascular care that treats hemorrhagic and ischemic stroke.

This segment also offers an orthopaedics portfolio that includes:

• Products and enabling technologies that support hips, knees, trauma, spine, sports, and other
• Surgery portfolios comprising advanced and general surgery technologies, as well as solutions for breast aesthetics, ear, nose, and throat procedures
• Contact lenses under the Acuvue brand and Tecnis intraocular lenses for cataract surgery.

The company distributes its products to wholesalers, hospitals, and retailers, as well as physicians, nurses, hospitals, eye care professionals, and clinics.

Its headquarters are in New Brunswick, New Jersey. The company was founded in 1886 by three brothers to sell ready-to-use sterile surgical dressings. It went public in 1944. Now, Johnson & Johnson competes with or is similar to AbbVie Inc. (NYSE: ABBV), Bristol-Myers Squibb Co. (NYSE: BMY), Merck & Co. Inc. (NYSE: MRK), Pfizer Inc. (NYSE: PFE), and others.

In 2023, the company split off its consumer health care business into a new publicly traded company, Kenvue Inc. (NYSE: KVUE). In addition, Johnson & Johnson is building a $2 billion pharmaceutical factory in North Carolina. It is also seeking expanded use for its Tremfya plaque psoriasis treatment. And it recently appointed a CIO to lead its business technology strategy.

Johnson & Johnson, the Stock

The share price is less than 6% higher than five years ago, far underperforming the S&P 500 in that time. In the past month, the stock is down almost 6%, while the S&P 500 is about 4% lower. It has traded for as much as $168.85 per share in the past year, but the consensus price target is up at $174.89. That signals nearly 18% potential upside in the next 12 months. Yet, fewer than half of the 24 analysts who cover the stock recommend buying shares. Wolf Research initiated coverage with an Outperform rating last month.

Johnson & Johnson is popular with hedge funds. Institutional investors hold about 73% of the shares. BlackRock, State Street, and Vanguard have notable stakes. Note that more than 17 million shares, or less than 1% of the float, are held short.

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