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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Johnson & Johnson in Focus
Based in New Brunswick, Johnson & Johnson (JNJ - Free Report) is in the Medical sector, and so far this year, shares have seen a price change of -7.2%. The world's biggest maker of health care products is paying out a dividend of $1.24 per share at the moment, with a dividend yield of 3.41% compared to the Large Cap Pharmaceuticals industry's yield of 2.38% and the S&P 500's yield of 1.57%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.96 is up 5.5% from last year. Johnson & Johnson has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 5.57%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Johnson & Johnson's current payout ratio is 46%. This means it paid out 46% of its trailing 12-month EPS as dividend.
JNJ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $10.63 per share, with earnings expected to increase 7.16% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, JNJ is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Johnson & Johnson (JNJ) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Johnson & Johnson in Focus
Based in New Brunswick, Johnson & Johnson (JNJ - Free Report) is in the Medical sector, and so far this year, shares have seen a price change of -7.2%. The world's biggest maker of health care products is paying out a dividend of $1.24 per share at the moment, with a dividend yield of 3.41% compared to the Large Cap Pharmaceuticals industry's yield of 2.38% and the S&P 500's yield of 1.57%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.96 is up 5.5% from last year. Johnson & Johnson has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 5.57%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Johnson & Johnson's current payout ratio is 46%. This means it paid out 46% of its trailing 12-month EPS as dividend.
JNJ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $10.63 per share, with earnings expected to increase 7.16% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, JNJ is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).