When considering defensive dividend stocks, the healthcare sector is a great place to look. After all, even during a recession, people need medicine and surgery, and there's always a need for medical breakthroughs.
However, among stocks in the recession-resistant healthcare sector, one in particular stands out as a blue chip dividend to buy and hold for the long run: Johnson & Johnson (JNJ -1.16%).
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A growth-focused stalwart among Dividend Kings
For 64 consecutive years, Johnson & Johnson has raised its quarterly cash dividend. This long track record of dividend growth places it in the Dividend Kings category, or stocks with at least 50 years of consecutive annual dividend growth.
NYSE: JNJ
Key Data Points
With this strong dedication to growing the dividend, it's no surprise that Johnson & Johnson is just as diligent on operational growth. By jettisoning slower-growing businesses and pivoting toward faster-growing segments of healthcare, such as hematology, the company can sustain the revenue and earnings growth necessary to both implement dividend increases and maintain the stock's valuation of around 21 times forward earnings.
Well positioned to generate solid total returns
When it comes to total returns, or the combination of price appreciation and cash returns from dividends, the ingredients are in place with Johnson & Johnson. Beyond the healthcare industry's recession-resistant dynamics, there are cold, hard numbers that support dividend sustainability.
For one, based on analyst estimates calling for 2026 earnings of $11.08 per shareand forward annual dividends of $5.36 per share, shares trade at a forward payout ratio of under 50%, a level most consider sustainable. Second, J&J's historic dividend growth, plus the size of the dividend itself, has been fairly modest. The stock has a 2.1% forward yield, with annual payout growth in the mid-single-digits .
While perhaps not the most exciting combination, J&J's modest yield, long track record of dividend growth, and focus on overall operational growth all point to solid total returns over a long time frame.
