Dividend Aristocrat Johnson & Johnson Offers Growth


Johnson & Johnson ( JNJ ) is the quintessential income play. The company offers slow and steady profit growth, pays rising dividends and is defensive in nature.

With roots dating back to the late 19th century, Johnson & Johnson is a titan in the health care field. The New Brunswick, N.J.-based firm makes everything from wound care and women's health products to prescription drugs to medical devices. It is perhaps best known for its Band-Aids, which are synonymous with bandages.

Johnson & Johnson has delivered higher adjusted earnings for 29 straight years. It has a five-year earnings growth rate of 4% and a superb five-year Earnings Stability Factor of 1. Analysts polled by Thomson Reuters see profit rising 7% to $5.48 a share this year. Another 7% gain is expected in 2014. Both were revised higher recently.

Profit growth in the latest quarters has perked up. Earnings grew 5% in Q1, 14% in Q2 and 9% in Q3 of 2013. Last year Johnson & Johnson's bottom line ticked up 1% or 2% over those same periods.

Strength in its ethical drugs business is helping to drive growth. In the latest quarters, Johnson & Johnson has reported double-digit gains in its Zytiga prostate cancer treatment, Stelara psoriasis drug and Simponi arthritis medication.

LikeWal-Mart ( WMT ), which was profiled in Friday's column , Johnson & Johnson is a member of the S&P 500 Dividend Aristocrats. The company has paid shareholders higher dividends for just over 50 years. Johnson & Johnson currently pays 66 cents a share each quarter or $2.64 a share annually. It has a yield of about 2.8%.

Johnson & Johnson and rivalAbbott Laboratories ( ABT ) are the only two members of IBD's Medical-Diversified group.

Following a breakout from a double-bottom base in October, Johnson & Johnson is now testing support at its 10-week line.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: ABT , JNJ , WMT

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