Some stocks simply pay a regular dividend. The smarter ones also raise their dividend payout every year, putting more cash in their shareholders' pockets. The ultimate ones have been raising their dividends for several decades and are committed to continuing. Johnson & Johnson (JNJ 1.06%) falls in the third bracket.
Johnson & Johnson, or J&J, is a Dividend King. That's an elite group of publicly listed companies in the U.S. that have increased their dividends for at least 50 consecutive years. This past April, J&J raised its dividend for the 63rd consecutive year.
Can you expect J&J to continue paying a bigger dividend year after year? Absolutely. J&J has a massive portfolio, a huge pipeline, and a solid cash profile.
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After spinning off its consumer health business (brands like Tylenol, Neutrogena, and Listerine) into a separate publicly listed company called Kenvue, J&J has become a healthcare pure play with a focus on pharmaceuticals and medical technology. Between the two verticals, 26 products or platforms generate over $1 billion in sales each, and that largely drives its revenue and cash flows.
J&J generates a lot of cash to plow back into growth and research and development (R&D), and pays dividends from the rest. In 2024, it spent $17 billion on R&D and paid out $11.8 billion in dividends.
Within its innovative medicines segment, J&J aspires to become the leading oncology company with $50 billion in sales. Darzalex and Carvykti should drive the push. Recently acquired Intra-Cellular Therapies for $14.6 billion has also added antipsychotic drug Caplyta to J&J's portfolio, a product it expects to scale to $5 billion. On the medtech side, robotic surgery and cardiovascular are major growth engines.
J&J is one of the largest healthcare companies in the U.S. today. Its rare mix of size, disciplined R&D investment, steady cash generation, a humongous pipeline, and six decades of uninterrupted dividend hikes makes it a solid contender for the ultimate dividend stock. The stock yields 2.9%.
