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Despite Settlement, J&J Dividend Going Strong

By: Investor's Business Daily
Posted: 11/8/2013 5:46:00 PM
Referenced Stocks: JNJ

Shares ofJohnson & Johnson ( JNJ ) are near record highs, even after the company's reputation took a blow.

The U.S. Justice Department announced Nov. 4 a settlement of more than $2.2 billion with the company to resolve criminal and civil charges of illegal marketing of medications.

J&J's Janssen Pharmaceuticals subsidiary pleaded guilty to promoting the antipsychotic drug Risperdal for unapproved uses. The settlement, which involved other drugs, also imposed a Corporate Integrity Agreement "designed to increase accountability and transparency and prevent future fraud and abuse," the Justice Department said.

J&J said the settlement was "previously accrued" and it will not result in an additional charge to earnings.

Johnson & Johnson -- which also makes Tylenol, Band-Aid, diagnostic devices and other health care products -- has a solid dividend.

It pays 66 cents a share each quarter, good for an annualized yield of nearly 3%. J&J is part of the S&P 500 Dividend Aristocrats, an index of companies that have increased payouts for at least 25 straight years.

In its latest quarterly results, announced Oct. 15, J&J earned $1.36 a share, up 9% and above estimates. Sales rose 3% to $17.58 billion, also above views.

The pharmaceutical business led the quarter's growth, up 10%.

Some new drugs are exceeding high expectations. Sales of prostate-cancer drug Zytiga surged 75% year over year to $464 million. The immunology drugs Simponi and Stelara grew 47% and 29%, respectively. But the medical devices and diagnostics division shed 2%.

The stock is forming a base with a possible buy point at 94.52. In January, J&J shares climbed above the 72 price level -- only the second time since September 2008.