These competitors all have past dividend growth rates greater than 9%, dividend yield’s above 2.0%, lower payout ratios, and higher estimated earnings growth. Of these competitors I’d start looking into Cardinal Health, Inc. (NYSE:CAH) first as its managed 17 years of consecutive dividend increases while keeping its payout ratio low and dividend growth rates high. It’s also expected to grow the most over the next 5 years.
is an interesting candidate, but because of its short dividend streak of 6 years compared to Johnson & Johnson (NYSE:JNJ)’s 50 years it is a bit like comparing apples to oranges from a dividend perspective. I’d feel much more comfortable with the safety of Johnson & Johnson’s dividend. It takes a special company to increase their dividend for half a century.
is a well known large international pharmaceutical company. I wouldn’t say it has the international presence of Johnson & Johnson, but it is up there. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) Industries has a more respectable dividend streak of 13 years, but it’s still a few years short of Cardinal Health and well short of Johnson & Johnson’s 50 years. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is based in Israel, and listed on the NYSE as an ADR so the dividend payments can fluctuate with changing currencies.
Johnson & Johnson (NYSE:JNJ) has been considered a dividend growth star for a number of years now. Their dividend streak of 50 consecutive years with dividend increases is very impressive as only a handful of companies have been able to reach this milestone. While you would have had good dividend growth in the past I think these rates will drop. The company’s payout ratio has been increasing over the years and I don’t think they’ll want it to go much higher. If the 5 year estimated EPS growth rate of 6.4% is roughly accurate then I expect the dividend growth will range from 4% to 6% per year going forward.
To see the full dividend stock analysis for Johnson & Johnson and my target buy price click here.
The article Will Dividend Growth for This Dividend King Start Slowing? originally appeared on Fool.com and is written by Michael Weber.
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