Shares of healthcare giant Johnson & Johnson (JNJ -0.47%) are down more than 13% this year even as the S&P 500 is up 4%. In fact, the stock is trading only a bit higher than its 52-week low. Could the stock's recent drop provide an opportunity? Johnson & Johnson has long been one of the favored stocks for income-oriented investors. Here are five reasons why Johnson & Johnson could be a smart buy now.

1. Johnson & Johnson shows consistent growth

Last year, the company's revenue grew 1.5% to $94.9 billion, and its guidance points to 4.5% to 5.5% growth this year, with the expected range falling between $96.9 billion and $97.9 billion. This shouldn't be surprising, because the company has been able to increase revenue for seven consecutive years.

Johnson & Johnson has increased annual revenue by 33.1% over the past decade and earnings per share (EPS) by 39.9% in that period. Last year was an exception as the company reported EPS of $6.73, down 13.8%, thanks in large part to inflation, increased supply chain costs, and the adverse effect of a strong dollar on the company's overseas sales.

Company CEO Joaquin Duato said he expects J&J's pharmaceutical segment alone to produce $60 billion in annual sales by 2025, with the biggest drivers in that segment to be Darzalex, Tremfya, Erleada, and Uptravi.

Darzalex, a multiple myeloma therapy, had $7.9 billion in 2022 sales, up 32.4%. Tremfya, a severe plaque psoriasis and psoriatic arthritis drug, brought in $2.7 billion last year, up 25.4%. Prostate cancer therapy Erleada had $1.8 billion in revenue, up 45.7%. Uptravi, used as a pulmonary arterial hypertension therapy, had $1.3 billion in sales, up 6.9%.

Duato said he also expects big growth this year from three recently launched therapies: Spravato, used to treat major depressive disorders, and two drugs for patients with relapsed or refractory multiple myeloma, Carvykti and Tecvayli.

Chart showing Johnson & Johnson's annual revenue level and diluted annual EPS down since 2022.

JNJ Revenue (Annual) data by YCharts

2. It's a safer harbor in an uncertain market

Johnson & Johnson is the type of stock that people seek to protect their investments when no one really knows where the market is headed.

The company's track record of performing well during recessionary periods is the reason why. Inflation and interest rates are still an issue, and there's a big concern about the health of the banking industry. Those uncertainties point to more bumpy months ahead in the markets.

Healthcare spending and healthcare stocks in general tend to be less affected by economic downturns. Johnson & Johnson, with more than 140,000 employees and more than 135 years of experience, is considered a safe bet within the industry.

3. The dividend will likely get even better

Johnson & Johnson has increased its quarterly dividend for 60 consecutive years and is expected to do so again next month, when it traditionally has announced its quarterly dividend increase. The most recent increase was 6.6% to $1.13 per share last April. 

At its current price, that works out to a yield of around 2.97%, well above the S&P 500 average of 1.74%. The company's strong cash flows should allow it to continue raising that dividend, even with a current payout ratio of 68%.

4. Abiomed should boost medtech sales

Johnson & Johnson completed its $16.6 billion acquisition of heart pump maker Abiomed in December. The company said it expects the deal to boost results by 2024. Its salesforce and supply chain should help the maker of Impella heart pumps increase its already strong sales.

In fiscal 2022, Abiomed reported $1.03 billion in annual revenue, up 22%, and a gross margin of 81.8%.

Johnson & Johnson's MedTech segment sales last year were $27.4 billion, up 1.4%. The growth was led by increased sales from the company's contact lenses, wound closure products, and electrophysiology products.

The cost of the Abiomed deal will have a small effect on adjusted EPS this year, but the company said it should add $0.05 to adjusted EPS in 2024 -- and even more so after.

5. The stock is priced to sell

Johnson & Johnson's popularity with income investors means it usually isn't underpriced, but thanks to its share drop, it is trading for roughly 22 times earnings, close to its lowest price-to-earnings ratio over the past five years. 

Bear in mind that once the company's spinoff of its Consumer Healthcare segment takes place (probably later this year), the company's margins should increase as that was the only company segment that saw declining sales in 2022.