Balancing Dividends and Fundamentals: The Case of NYSE:JNJ.

Last update: Jan 9, 2024

JOHNSON & JOHNSON (NYSE:JNJ) has caught the attention of dividend investors as a stock worth considering. NYSE:JNJ excels in profitability, solvency, and liquidity, all while providing a decent dividend. Let's delve into the details.

What does the Dividend looks like for NYSE:JNJ

ChartMill assigns a Dividend Rating to every stock. This score ranges from 0 to 10 and evaluates the different dividend aspects, including the yield, the growth and sustainability. NYSE:JNJ scores a 7 out of 10:

Compared to an average industry Dividend Yield of 4.29, JNJ pays a better dividend. On top of this JNJ pays more dividend than 93.07% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, JNJ pays a bit more dividend than the S&P500 average.
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 its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
JNJ pays out 34.25% of its income as dividend. This is a sustainable payout ratio.

Health Insights: NYSE:JNJ

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:JNJ has earned a 7 out of 10:

JNJ has an Altman-Z score of 4.84. This indicates that JNJ is financially healthy and has little risk of bankruptcy at the moment.
JNJ's Altman-Z score of 4.84 is fine compared to the rest of the industry. JNJ outperforms 79.70% 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 91.58% 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.

Evaluating Profitability: NYSE:JNJ

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:

With an excellent Return On Assets value of 20.85%, JNJ belongs to the best of the industry, outperforming 97.03% of the companies in the same industry.
With an excellent Return On Equity value of 48.61%, JNJ belongs to the best of the industry, outperforming 96.04% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 17.66%, JNJ belongs to the top of the industry, outperforming 93.56% of the companies in the same industry.
The last Return On Invested Capital (17.66%) for JNJ is above the 3 year average (15.62%), which is a sign of increasing profitability.
JNJ has a Profit Margin of 39.58%. This is amongst the best in the industry. JNJ outperforms 98.02% of its industry peers.
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 94.55% of its industry peers.
JNJ's Operating Margin has improved in the last couple of years.
The Gross Margin of JNJ (68.86%) is better than 75.25% of its industry peers.

More Best Dividend stocks can be found in our Best Dividend screener.

For an up to date full fundamental analysis you can check the fundamental report of JNJ

Keep in mind

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.