Shares of healthcare giant Johnson & Johnson (JNJ) have retreated over 3% in the past year, despite displaying consistent robust financial performance and paying attractive dividends. That’s exactly why financial blogger Nikolaos Sismanis considers JNJ’s current share price level one of the best buying opportunities in over a decade.
What’s even more interesting is that Johnson & Johnson is set to release its Q2FY24 results on Wednesday, July 17, before the market opens. JNJ boasts a solid history of beating analysts’ consensus for the past eight consecutive quarters. The timing being perfect, let’s quickly look at the three key reasons that make Johnson & Johnson an attractive dividend growth stock.
- Q1 beat-and-raise results promise solid future performance: JNJ exceeded Q1FY24 earnings expectations and also lifted the outlook for the full year. This was driven by strong performance in the U.S. market and a powerful pipeline of drugs in JNJ’s Innovative Medicine segment. Plus, JNJ’s margins are improving with effective cost management strategies. The solid financials contribute strongly to JNJ’s ability to keep growing its dividends.
- JNJ’s shares are currently undervalued: JNJ trades at a forward P/E (price-to-earnings per share) of 14.4x, much lower than its own past decade average of 17x. Thus, there is ample scope for growth in JNJ shares.
- JNJ stock carries the highest dividend yield in 12 years: JNJ pays a regular quarterly dividend of $1.24 per share, reflecting a yield of 3.21%. The recent share price compression and the consistent dividend payments, have enabled JNJ to boast healthy, above industry average yields, making it a compelling dividend stock. Remarkably, JNJ is known as a Dividend King, having increased its annual dividends for more than 60 consecutive years.
Final Thoughts
Johnson & Johnson stock has been under pressure regardless of displaying consistently sound financials, growing dividend base, and the scope for reporting highest profits in Fiscal year 2024. The stock’s cheap current valuation makes an attractive entry point to invest in the stock, right before the company releases another blockbuster quarterly performance. Note that Options Traders are factoring in a +/- 2.45% share price movement, following the Q2 results.
