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.