Johnson & Johnson (JNJ) is an American healthcare conglomerate involved in the production and distribution of pharmaceuticals, consumer package goods and medical devices, and the stock should continue outperforming, says Sean Brodrick, editor of Wealth Megatrends.
The company generates 55% of its revenues from pharmaceuticals, 20% from healthcare supplies, and the remainder from personal care products and medical devices. The stock sports a market capitalization north of $450 billion and generated Q3 revenues totaling $23.8 billion.
The company has a strong pharmaceutical portfolio including Darzalex, Tremfya and Stelara — drugs that treat multiple myeloma, psoriatic arthritis and immune disease, respectively. Its pharmaceutical pipeline helped increase adjusted operational sales by 9.2% in Q3. J&J also owns consumer product brands such as Tylenol, Listerine, Band-Aid and Zyrtec.
Moreover, JNJ is one of the safest dividend raisers around. The company hasn’t skipped a payment in 106 years, and it has grown them for 60 years in a row! During that 60-year period, it faced nine recessions, 15% inflation and interest rates topping 20%. But JNJ increased its payments by an average of 6% per year over the last three years, and it’s projected to continue raising them 5% annually over the next three.
JNJ yielded 2.5% at recent prices and pays out 62% of its net income through dividends. But the stockholder returns don’t stop there. The company consistently buys back its stock to reward shareholders and improve its financial profile, too. Over the past four quarters, JNJ repurchased over $5.7 billion in shares. The healthcare giant’s board approved another $5 billion buyback program in September.
My recommendation? Buy Johnson & Johnson at the market.