Why NYSE:JNJ qualifies as a good dividend investing stock.

Last update: Dec 19, 2023

Take a closer look at JOHNSON & JOHNSON (NYSE:JNJ), a stock of interest to dividend investors uncovered by our stock screener. NYSE:JNJ excels in fundamentals and provides a decent dividend, all while maintaining a reasonable valuation. Let's break it down further.

Dividend Assessment of NYSE:JNJ

ChartMill employs its own Dividend Rating system for all stocks. This score, on a scale of 0 to 10, is determined by evaluating different dividend factors, such as yield, historical performance, dividend growth, and sustainability. NYSE:JNJ has been assigned a 7 for dividend:

Compared to an average industry Dividend Yield of 4.63, JNJ pays a better dividend. On top of this JNJ pays more dividend than 93.10% of the companies listed in the same industry.
JNJ's Dividend Yield is a higher than the S&P500 average which is at 2.45.
On average, the dividend of JNJ grows each year by 9.96%, which is quite nice.
JNJ has been paying a dividend for at least 10 years, so it has a reliable track record.
JNJ has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
34.25% of the earnings are spent on dividend by JNJ. This is a low number and sustainable payout ratio.

Understanding NYSE:JNJ's Health Score

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:JNJ has earned a 7 out of 10:

An Altman-Z score of 4.75 indicates that JNJ is not in any danger for bankruptcy at the moment.
JNJ's Altman-Z score of 4.75 is amongst the best of the industry. JNJ outperforms 81.28% of its industry peers.
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.
The Debt to FCF ratio of JNJ (1.90) is better than 91.63% of its industry peers.
JNJ has a Debt/Equity ratio of 0.39. This is a healthy value indicating a solid balance between debt and equity.
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.
JNJ does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Understanding NYSE:JNJ's Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:JNJ has achieved a 9:

JNJ has a better Return On Assets (20.85%) than 97.04% of its industry peers.
JNJ has a better Return On Equity (48.61%) than 96.06% of its industry peers.
With an excellent Return On Invested Capital value of 17.66%, JNJ belongs to the best of the industry, outperforming 93.60% of the companies in the same industry.
The 3 year average ROIC (15.62%) for JNJ is below the current ROIC(17.66%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 39.58%, JNJ belongs to the best of the industry, outperforming 98.03% of the companies in the same industry.
JNJ's Profit Margin has improved in the last couple of years.
JNJ's Operating Margin of 28.66% is amongst the best of the industry. JNJ outperforms 94.58% of its industry peers.
In the last couple of years the Operating Margin of JNJ has grown nicely.
Looking at the Gross Margin, with a value of 68.86%, JNJ is in the better half of the industry, outperforming 75.37% of the companies in the same industry.

Every day, new Best Dividend stocks can be found on ChartMill in our Best Dividend screener.

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

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.