We recently compiled a list of the 13 Best Pharma Dividend Stocks To Buy In 2024. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against the other pharma dividend stocks.

The pharmaceutical industry in 2024 faced a relatively quiet year, with deal volumes similar to 2023 but lower deal values, reflecting a shift toward smaller, more strategic transactions. Despite challenges such as patent expirations and market uncertainty, innovation remains strong, and there is a better investment environment for biotech. Lower interest rates have also eased capital costs, contributing to increased mergers and acquisitions activity. Biotech IPOs and venture capital investments are seeing a slight recovery, though investment is more concentrated in established companies. However, major pharmaceutical companies face a $300 billion growth gap due to patent expirations, making dealmaking crucial for future growth.

Looking ahead to 2025, EY believes that the pharmaceutical sector is expected to see more deal activity, especially if interest rates remain low. There may be a rise in larger acquisitions to address growth gaps, although smaller, strategic deals are likely to persist. Politically, the US policy environment is shifting with potential impacts on business, including lower corporate taxes and deregulation, but also the possibility of higher tariffs and continued drug pricing reforms. Changes in immigration and leadership within health agencies could also affect the pharmaceutical and biotech industries, with new appointees potentially disrupting the regulatory landscape.

As executives prepare for 2025, drug pricing and access remain their top concerns, according to a Deloitte survey. The survey highlighted that primary concerns include competition from generic drugs and biosimilars and the looming patent cliff, with over $300 billion in sales at risk due to expiring patents by 2030. This has executives expecting a surge in mergers and acquisitions in 2025.

Innovation remains at the forefront as companies look to fill gaps left by expiring patents. However, competition in profitable areas like oncology and immunology is fierce, leading to price pressures even before generics or biosimilars hit the market. On the flip side, the success of GLP-1 receptor agonists is sparking renewed interest in general medicines, with companies racing to tap into the $200 billion market. Additionally, about 20% of companies are adjusting their portfolios to focus on high-potential candidates and better meet market demands. Advanced therapies like cell and gene therapies are also gaining attention, with a shift away from more traditional drugs.

In addition to the competitive landscape, life sciences companies are also keeping a close eye on regulatory changes. In the United States, concerns about the Inflation Reduction Act are growing, while in Europe, shifts in clinical trial regulations could add complexity. As a result, life sciences companies are preparing for a year of both innovation-driven growth and regulatory challenges.

Our Methodology 

In this article, we reviewed Insider Monkey’s Q3 2024 database to identify pharmaceutical dividend stocks that hedge funds favored the most. The companies listed below are ranked in ascending order based on the number of hedge fund holders in each firm.

At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)

Johnson & Johnson (NYSE:JNJ)

Dividend Yield as of December 28: 3.43%

Number of Hedge Fund Holders: 81

Johnson & Johnson (NYSE:JNJ) operates globally in healthcare through its Innovative Medicine and MedTech segments. It offers treatments for conditions like rheumatoid arthritis, HIV/AIDS, schizophrenia, cancer, diabetes, and pulmonary hypertension. The MedTech segment provides solutions for heart disorders, stroke, orthopedics, surgeries, and vision care. Johnson & Johnson (NYSE:JNJ) ranks 4th on our list of the best dividend stocks.

Johnson & Johnson (NYSE:JNJ) achieved strong results in Q3, with 6.3% operational sales growth, driven by a shift towards high-innovation, high-growth markets. The company’s sales exceeded $14 billion for the second consecutive quarter in Innovative Medicine, with key brands, including DARZALEX, seeing double-digit growth. MedTech also saw positive momentum, particularly in Cardiovascular, with acquisitions of Shockwave and Abiomed boosting performance. The company made significant advancements, including FDA approvals for RYBREVANT and TREMFYA, and the launch of Shockwave E8 and new contact lenses.

Johnson & Johnson (NYSE:JNJ) remains confident in its future growth, having invested $18 billion in M&A, and raised its earnings guidance for the third quarter in a row. Worldwide Q3 sales reached $22.5 billion, with a net income of $2.7 billion and a diluted EPS of $1.11. Johnson & Johnson (NYSE:JNJ) ended Q3 with $20 billion in cash and marketable securities, and $36 billion in debt, resulting in a net debt of $16 billion. J&J also paid a $1.24 per share quarterly dividend on December 10. The company remains focused on innovation and strategic investments, spending nearly $5 billion on R&D during the quarter and $18 billion on acquisitions and licensing agreements, including the acquisition of V-Wave for heart failure treatments.

Insider Monkey’s third-quarter database shows that Johnson & Johnson (NYSE:JNJ) was found in 81 hedge funds, compared to 80 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with 7.5 million shares worth $1.2 billion.

Overall JNJ ranks 4th on our list of the best pharma dividend stocks to buy in 2024. While we acknowledge the potential of JNJ as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than JNJ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.