Quarterly cash dividend
Johnson & Johnson (JNJ) announced a quarterly cash dividend of $0.80 per share on July 18, 2016, payable on September 6, 2016. This is the same as the previous quarter’s dividend payment. It compares to a quarterly dividend of $0.75 per share in the last quarter of the previous fiscal year.
This change represents an increase of around 6.7% over the previous year’s quarterly dividend payment. Johnson & Johnson’s annual dividend amounts to $3.20 per share for fiscal 2016.
Johnson & Johnson’s dividend payout strategy
According to Johnson & Johnson’s capital allocation strategy, dividend payout has consistently been a priority for the company for several years. It has regularly returned value to its shareholders through increasing dividends. It’s an S&P dividend aristocrat, a stock that’s a constituent of the S&P 500 and has paid increasing dividends consistently for at least 25 years.
Some of the other S&P 500 dividend aristocrats in the medical device industry include Medtronic (MDT), Becton Dickinson (BDX), and Abbott Laboratories (ABT). You can gain exposure to these stocks by investing in the Vanguard Dividend Appreciation ETF (VIG).
Johnson & Johnson has reached a dividend payout ratio of approximately 56%. Its dividend yield is about 2.6%, which is estimated to be above the market average. The company has paid increasing dividends to shareholders consecutively for the last 54 years, and its five-year net dividend growth rate is about 6.9%.
After JNJ’s dividend payments to its shareholders, it still holds enough cash flow to invest in strategic mergers and acquisitions as well as share buybacks. So the company is positioned strongly to continue to improve its dividend payments and increase shareholder value.
Next, we’ll take a look at JNJ’s valuation compared to its peers.