Why the dividend investor may take a look at NYSE:JNJ.

Last update: Nov 6, 2023

JOHNSON & JOHNSON (NYSE:JNJ) was identified as a stock worth exploring by dividend investors by our stock screener. NYSE:JNJ scores well on profitability, solvency and liquidity. At the same time it seems to pay a decent dividend. We'll explore this a bit deeper below.

Dividend Analysis for NYSE:JNJ

ChartMill assigns a proprietary Dividend Rating to each stock. The score is computed by evaluating various valuation aspects, like the yield, the history, the dividend growth and sustainability. NYSE:JNJ was assigned a score of 7 for dividend:

JNJ's Dividend Yield is rather good when compared to the industry average which is at 4.58. JNJ pays more dividend than 93.20% of the companies in the same industry.
On average, the dividend of JNJ grows each year by 9.96%, which is quite nice.
JNJ has paid a dividend for at least 10 years, which is a reliable track record.
JNJ has not decreased their dividend for at least 10 years, which is a reliable track record.
34.32% of the earnings are spent on dividend by JNJ. This is a low number and sustainable payout ratio.

What does the Health looks like for NYSE:JNJ

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:JNJ, the assigned 7 for health provides valuable insights:

An Altman-Z score of 4.82 indicates that JNJ is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.82, JNJ belongs to the top of the industry, outperforming 81.07% of the companies in the same industry.
JNJ has a debt to FCF ratio of 1.90. This is a very positive value and a sign of high solvency as it would only need 1.90 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.90, JNJ belongs to the top of the industry, outperforming 92.23% of the companies in the same industry.
A Debt/Equity ratio of 0.39 indicates that JNJ is not too dependend on debt financing.
Although JNJ does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
The current and quick ratio evaluation for JNJ is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Looking at the Profitability

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:JNJ, the assigned 9 is noteworthy for profitability:

JNJ's Return On Assets of 20.81% is amongst the best of the industry. JNJ outperforms 96.12% of its industry peers.
With an excellent Return On Equity value of 48.51%, JNJ belongs to the best of the industry, outperforming 96.12% of the companies in the same industry.
JNJ has a Return On Invested Capital of 17.25%. This is amongst the best in the industry. JNJ outperforms 93.20% of its industry peers.
The 3 year average ROIC (15.87%) for JNJ is below the current ROIC(17.25%), indicating increased profibility in the last year.
The Profit Margin of JNJ (30.79%) is better than 96.60% of its industry peers.
JNJ's Profit Margin has improved in the last couple of years.
The Operating Margin of JNJ (21.82%) is better than 90.29% of its industry peers.
In the last couple of years the Operating Margin of JNJ has grown nicely.
JNJ has a better Gross Margin (68.24%) than 73.79% of its industry peers.

Our Best Dividend screener lists more Best Dividend stocks and is updated daily.

Our latest full fundamental report of JNJ contains the most current fundamental analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.