Why NYSE:JNJ provides a good dividend, while having solid fundamentals.

Last update: Apr 4, 2024

Unearth the potential of JOHNSON & JOHNSON (NYSE:JNJ) as a dividend stock recommended by our stock screening tool. NYSE:JNJ maintains a robust financial footing and delivers a sustainable dividend. We'll delve into the details below.

Deciphering NYSE:JNJ's Dividend Rating

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 4.24. JNJ pays more dividend than 93.50% of the companies in the same industry.
JNJ's Dividend Yield is a higher than the S&P500 average which is at 2.31.
The dividend of JNJ is nicely growing with an annual growth rate of 9.96%!
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 33.48% of its income as dividend. This is a sustainable payout ratio.

Understanding NYSE:JNJ's Health Score

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 8 for health provides valuable insights:

An Altman-Z score of 4.57 indicates that JNJ is not in any danger for bankruptcy at the moment.
The Altman-Z score of JNJ (4.57) is better than 81.50% of its industry peers.
JNJ has a debt to FCF ratio of 1.61. This is a very positive value and a sign of high solvency as it would only need 1.61 years to pay back of all of its debts.
The Debt to FCF ratio of JNJ (1.61) is better than 94.00% of its industry peers.
A Debt/Equity ratio of 0.41 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.
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.

Profitability Examination for NYSE:JNJ

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:JNJ scores a 9 out of 10:

The Return On Assets of JNJ (20.98%) is better than 97.00% of its industry peers.
JNJ has a Return On Equity of 51.11%. This is amongst the best in the industry. JNJ outperforms 97.50% of its industry peers.
The Return On Invested Capital of JNJ (16.76%) is better than 93.50% of its industry peers.
The 3 year average ROIC (14.68%) for JNJ is below the current ROIC(16.76%), indicating increased profibility in the last year.
JNJ has a Profit Margin of 41.28%. This is amongst the best in the industry. JNJ outperforms 97.00% of its industry peers.
In the last couple of years the Profit Margin of JNJ has grown nicely.
JNJ has a Operating Margin of 28.05%. This is amongst the best in the industry. JNJ outperforms 94.00% of its industry peers.
In the last couple of years the Operating Margin of JNJ has grown nicely.
JNJ's Gross Margin of 69.18% is fine compared to the rest of the industry. JNJ outperforms 74.00% of its industry peers.

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

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

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.