Johnson & Johnson (JNJ): Dividends Will Probably Rise 8% Per Year

By J. Royden Ward, Editor of Cabot Benjamin Graham Value Letter
From Cabot Wealth Advisory 10/21/10 Sign up for free Cabot Wealth Advisory e-newsletter

Johnson & Johnson (JNJ) is the world’s largest and most diversified health care company. The company produces a large variety of drugs, medical and diagnostic equipment, and consumer products.

After experiencing slower growth during the past couple of years, Johnson & Johnson is now focused on faster growing health care segments and on divesting underperforming divisions. Sales and earnings growth of 8% to 9% per year during the past 10 years was accompanied by 14% dividend growth.

Acquisitions and new product introductions will help sales and earnings grow by 6% to 7% during the next five years. Dividends will probably increase 8% per year.

JNJ shares are reasonably priced at 12.6 times forward EPS. Dividends have been paid since 1944 and currently provide a yield of 3.5%.

Editor’s Note: You can find additional dividend-paying stocks selling at bargain prices in the Cabot Benjamin Graham Value Letter. In every issue, you’ll find my legendary Maximum Buy and Minimum Sell Prices for over 250 stocks. Click here to get started today!

Roy Ward
J. Royden Ward

Editor of Cabot Benjamin Graham Value Letter
A lifelong investment professional, J. Royden Ward applies his 40 years of investment research, portfolio management, writing and publishing experience to his role as analyst and editor of Cabot Benjamin Graham Value Letter, which is directed to long-term investors seeking a guide to profitable value investing based on the time-tested systems originally developed by Benjamin Graham, the Father of Value Investing. A second-generation disciple of Benjamin Graham, Roy in 1969 pioneered the development of a computerized model that applied the formulas developed by Graham using a unique ranking system. Today, Roy applies his system to two models in the Value Letter.