Does Johnson & Johnson’s (JNJ) Dividend Have Room to Soar?

Future growth
Up to this point, we’ve looked at Johnson & Johnson (NYSE: JNJ)’s dividend in the past, and we’ve also seen how its stock is being perceived by the market today. However, the most important factor to consider when understanding a dividend’s future is where the company’s cash flow is heading. It’s hard to generate more cash without growing sales, so let’s take a look at what industry analysts are expecting for Johnson & Johnson’s revenue growth relative to peers this year.

Foolish bottom line

Investors are flocking toward Johnson & Johnson (NYSE: JNJ)’s dividend for good reason, the company is about as stable as you’ll find in the industry. While its payout ratios might look a bit high relative to pharmaceutical averages, defining Johnson & Johnson as a pharma company doesn’t tell the complete story. Following the recent acquisition of Synthes, its medical devices business is actually a larger contributor to revenue than pharmaceuticals, and the company also sports a sizable consumer products segment. Because this balanced attack insulates Johnson & Johnson (NYSE: JNJ) from the patent risks that are impacting so many of its peers, and given its pristine balance sheet with plenty of room for additional borrowing, it’s a safe bet that this dividend is set to grow.

The article Does Johnson & Johnson’s Dividend Have Room to Soar? originally appeared on Fool.com and is written by Brenton Flynn.

Brenton Flynn has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

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