One of the most popular dividend aristocrats on the market today is Johnson & Johnson (JNJ). Since 2000, stocks have returned less than 9% a year and continue to increase their dividends each year over the decades. The company faces hundreds of lawsuits relating to the marketing of opioid drugs and thousands more of JNJ infant asbestos powder. JNJ would be an almost perfect investment stock if it weren’t for product liability. In 2021, JNJ expects to earn $10.55 per share, while in 2022, JNJ expects $10.42.
JNJ trades for a little less than $170, so its purchase price offset is about 6.1% per annum based on 2022 revenue. JNJ’s approach of paying a respectable dividend and reinvesting the balance of the money in the company was successful in the long run. There are, however, specific reasons why JNJ could see fewer returns than the average projection. JNJ shares are expected to return approximately 6.5% per year, in line with the market’s utility and other defensive sectors.
I Got It Right the previous two decades, Johnson & Johnson (JNJ) managed to increase its dividends by at least 6% a year. Over the next five years, Johnson & Johnson will likely deliver average returns consistent with the longer-term performance of the broader market. Consumer Health’s revenue comes from standard products found on store shelves. As a result, the pharmaceutical industry is one of JNJ’s most competitive and uncertain business segments.
There is no guarantee that a company will be successful in researching a new drug, so there is a lot of uncertainty in this field for JNJ. The medical device industry sells medical devices, from pacemakers to prosthetics, used in all areas. JNJ reported moderate revenue growth in the recent 10-K and stable margins of 16 percent. In the previous 10-K, I used a DCF model to estimate revenue recovery and modest growth for Johnson & Johnson (JNJ) and Cardinal Health (CAH). Analysts anticipate that 20% of operating margins would be conservative.
JNJ’s valuation was based on a 7.5% discount rate compared to Cardinal Health’s discount rate of a percentage. This discrepancy in value makes a substantial difference in the valuation. The forecast is that the company will return at least 8% in the long term. Johnson & Johnson is a beautiful company with a big gap and a strong dividend track record. Today, however, only average market returns are available.
Johnson & Johnson (JNJ) rose 11.58% in the four previous years, while the S & P 500 rose 27.52%. Total return on purchase and maintenance at the end of 2025 ranges from 6 to 11 percent. The dividend is secure, and double-digit average returns are viable prospects. Any drop in the stock price could give dividend growth investors a decent buying opportunity. The company focuses on human health and wellness products.
Why Johnson & Johnson Stock Is Breaking Out
Traditional measurements do not work if the impact of COVID-19 deforms the “E” into P/E. The required average annual share price increase rate from June 25, 2021, to December 31, 2025, is 4.92 % to achieve a return of 7.5%. Dividends, including expected increases in dividends, represent the balance of the overall target return. JNJ shares are currently trading at a record per share.
Analysts assess necessary changes in the P/E ratio from another pre-COVID-19 starting point. It is difficult to determine if the distortion of earnings and sentiment caused by the pandemic are favorable or the result of a distorted starting point. Robert Honey describes Dividend Growth Income + Club’s approach to analyzing financial stocks. Only by receiving dividends and increasing the share price above the purchase price can an investor get a good return on an investment in shares. Unlike the standard index, stock prices are influenced by increases or decreases in EPS and a change in the P/E ratio.
It is advisable to examine whether distributions from and other sources of dividend cash flow are taken into account. Table 3 demonstrates the prospective earnings of investments in JNJ shares across a variety of historical P/E ratios. The analysis assumes that an investor buying JNJ shares now would be willing to maintain their return targets through 2025, if necessary. Comparison statistics for purchases at closing stock price as of June 25, 2021, and holdings for 2021 to 2025. All EPS forecasts are based on analyst consensus, low and high SA premium estimates.
With historical P/E ratios, JNJ conservatively shows an average annual return of 5.8 percent to 10.9 percent through the end of 2025. Indicative returns on top of the expected return for JNJ range from 6.1% to 11.3%, with a consensus of 8.6%. An indication of the degree of certainty in the analyst’s estimates is the difference between the best and worst case. As of early January 2017, JNJ had $14,407 million in net cash debt. After the first quarter of 2020, that position changed to a net cash debt of $8,994 million for $23,401.
During the 4.25 years, the outstanding common shares decreased from 2,706.5 million to 2,632.7 million by 73.8 million. The decrease was due to share buybacks partially offset by employee stock issues. Most investors in JNJ stocks have achieved double-digit returns over the past six years. The company’s concerns about employee stocks were a significant expense item and changes in the valuation of pension fund assets. Yet another example of the “leak equity bucket syndrome” is when equity is transferred to non-shareholders and is not included in reported earnings. However, at least $41,494 million in dividends exceed the adjusted net operating income of $46,966 million during the period.
Johnson & Johnson (JNJ) has long been an ultra-stable company in many pension portfolios and deserves a dividend position. The corporation met both high and low expectations and improved its full-year estimate. In April of this year, the JNJ Board of Directors decided to increase the annual dividend to the company for the 59th consecutive year. The company’s ability to maintain solid cash flows has been bread and butter for so many years.
Many stocks that have increased their dividends for over 20 years have faced difficult years of urgent dividend payments, while JNJ currently maintains a payout ratio of just 51%. The company’s pharmaceutical section is expected to hit its tenth consecutive year above-market growth. JNJ shares trade at 19.7x P/E, which currently looks a little expensive. The company continues to expand its free cash flows through organic expansion and mergers and acquisitions, which will support its 59-year dividend increase. As a result, the corporation provides increasingly stable and reliable dividends over the years.
JNJ has a rich pipeline, but another exciting chance lies in the field of robotic medical devices. After the company increased legal reserves by $1.5 billion, S&P Global changed the company’s “bad” outlook.
Johnson & Johnson Stock: What You Need To Know
Johnson & Johnson stock (NYSE: JNJ) is one of the best-performing stocks on the Dow Jones Industrial Average, gaining more than 20% in the past 12 months. In large part, this is due to the company’s impressive performance in the medical device segment. Johnson & Johnson is one of the largest medical device manufacturers in the world. The company has a market capitalization of $360.8 billion.
In recent years, Johnson & Johnson has continued to improve its scale of operations and enter several faster-growing product segments. As such, the company continued to see strong organic growth, with nine of its top 10 product groups posting sales growth. The company also acquired several smaller medical device companies. It focused on strengthening its presence in the industry’s medical device market, including developing new drug delivery and monitoring devices. Johnson & Johnson has also been working to increase its presence in international markets. One of the company’s main focuses is the performance of its pharmaceutical division. The company has grown its earnings per share at an average annual rate of 11.14% over the past five years. The growth rate
In the third quarter, the medical device market witnessed robust growth. This quarter, more than 5% of all surgical procedures were performed in an operating room with Johnson & Johnson products. In addition, nearly 7% of all minimally invasive surgeries were completed in an operating room with Johnson & Johnson products, compared to last year. With its products and devices, Johnson & Johnson is helping to improve the quality of life and increase the productivity of patients and physicians. In addition, the company’s 3D printing technology has proven to be valuable for medical devices.
If the NASH deal passes, the JNJ will immediately enter the fast-growing treatments market for NASH. Johnson & Johnson’s reputation for doing great work for humanity will give patients faith in the NASH development program. Analysts believe the company’s investment in 21st Century Oncology will lead to additional revenue for JNJ with cancer drugs. The combination of time value, speculative risk, and profitability potential will provide excellent returns. (JNJ vs. Dow Jones Index)