Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Johnson & Johnson in Focus
Based in New Brunswick, Johnson & Johnson (JNJ - Free Report) is in the Medical sector, and so far this year, shares have seen a price change of -2.54%. The world's biggest maker of health care products is currently shelling out a dividend of $1.19 per share, with a dividend yield of 2.76%. This compares to the Large Cap Pharmaceuticals industry's yield of 2.72% and the S&P 500's yield of 1.62%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.76 is up 7% from last year. Over the last 5 years, Johnson & Johnson has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.85%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Johnson & Johnson's current payout ratio is 46%. This means it paid out 46% of its trailing 12-month EPS as dividend.
JNJ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $10.75 per share, with earnings expected to increase 5.91% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, JNJ presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
4 Oil Stocks with Massive Upsides
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Zacks Investment Research has just released an urgent special report to help you bank on this trend.
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Johnson & Johnson in Focus
Based in New Brunswick, Johnson & Johnson (JNJ - Free Report) is in the Medical sector, and so far this year, shares have seen a price change of -2.54%. The world's biggest maker of health care products is currently shelling out a dividend of $1.19 per share, with a dividend yield of 2.76%. This compares to the Large Cap Pharmaceuticals industry's yield of 2.72% and the S&P 500's yield of 1.62%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.76 is up 7% from last year. Over the last 5 years, Johnson & Johnson has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.85%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Johnson & Johnson's current payout ratio is 46%. This means it paid out 46% of its trailing 12-month EPS as dividend.
JNJ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $10.75 per share, with earnings expected to increase 5.91% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, JNJ presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
4 Oil Stocks with Massive Upsides
Global demand for oil is through the roof... and oil producers are struggling to keep up. So even though oil prices are well off their recent highs, you can expect big profits from the companies that supply the world with "black gold."
Zacks Investment Research has just released an urgent special report to help you bank on this trend.
In Oil Market on Fire, you'll discover 4 unexpected oil and gas stocks positioned for big gains in the coming weeks and months. You don't want to miss these recommendations.
Download your free report now to see them.
Get the latest research report on JNJ - FREE