Johnson & Johnson (JNJ), one of the world’s leading manufacturers of pharmaceuticals, health care, and healthcare products, has increased its dividend every year for the past 60 years. Currently, the dividend yield for the JNJ stock is approximately 2.5%. Despite continued growth, some investors are concerned Johnson & Johnson will eventually face difficulties. Are these fears justified?
Several products are offered by Johnson & Johnson. Through acquisitions, the Johnson & Johnson continues to grow. The Johnson & Johnson has struggled lately with a string of acquisitions that did not pay off as swiftly as expected, and the debt raised to close the deals remains. To service its $ 32.6 billion of long-term debt Johnson & Johnson will have to shell out a couple hundred million dollars in interest payments in 2020. Other liabilities in employee protection and other liabilities, worth another $22.7 billion, do not figure into this debt burden.
The declining dividend coverage ratio is also caused for concern. With an even more stable 2019 outlook, the $ 3.98 annual dividend took the bulk of JJohnson & Johnson (JNJ) $5.63 earnings per share. The profits were returned to shareholders to the tune of 70%. The figure was 50 % five years ago, and 40 % fifteen years ago. In today’s economic environment, investors are cautious.
The Johnson & Johnson had sufficient resources to recover its financial performance anyway. Medical products and pharmaceuticals are some of the organization’s main drivers. Even though the JNJ stock’s manufacturers of consumer care items are well-known to most customers, it receives only 15 percent of its income from those same products. The JNJ stock’s makes most of its money selling prescription drugs. During the last year, Johnson & Johnson has enjoyed sales of pharmaceuticals of more than 50%, and medical products represented 30%.
Despite its recent successes in developing a vaccine against COVID-19, Johnson & Johnson (JNJ) still has the resources to strengthen its pharmaceutical segment. Despite the lack of a leader in the market, the JNJ stock’s vaccine, unlike competitors’, requires one dose to be effective, almost eliminates hospitalization for coronavirus, is affordable, and is easy to store. Hence, Johnson & Johnson can gain a solid market share, even though it lags behind its competitors for some time. Johnson & Johnson also has developed effective cancer drugs.
Johnson & Johnson invests in new developments with no intention to cut back, giving it a strong position in biotech and contributing to sustainability. Johnson & Johnson has a good chance of staying a leader in its industry and a solid dividend payer.
Johnson & Johnson (JNJ) closed Thursday’s session at $162.83 after losing -0.92%. During the past 50 days, 8.29 million shares averaged daily on the stock exchange, but the daily volume never exceeded 7.23 million shares. The shares of JNJ have gained 26.41% over the past 12 months, and have gained 0.53% in the last week. Over the past three months, the stock has gained 4.34%, while over the past six months, it has gained 9.37%. Additional to this, the current market value of the JNJ stock stands at $432.68 billion, while its outstanding shares are 2.63 billion.