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Inside Johnson & Johnson’s Latest Dividend Payment

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Quarterly cash dividend

Johnson & Johnson (JNJ) announced a quarterly cash dividend of $0.80 per share on January 3, 2017. The dividend will be payable on March 14, 2017, to shareholders of record on February 28, 2017. This is the same as the previous quarter’s dividend payment and compares to the quarterly dividend of $0.75 per share in 4Q15.

Notably, this latest dividend payment represents dividend growth rate of 6.7% over the previous year’s quarterly dividend payment. JNJ’s annual dividend payout amounts to $3.20 per share for fiscal 2016.

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JNJ’s dividend payout strategy

Johnson & Johnson has followed a consistent capital allocation strategy focused on shareholder value creation through dividend payments and share repurchases. The company’s capital allocation strategy has always prioritized dividend payments, followed by strategic acquisitions. The diagram above shows JNJ’s capital allocation framework.

Johnson & Johnson has consistently paid increasing dividends to its shareholders for the last 54 years, making the company part of the S&P 500 Dividend Aristocrats Index, which consists of US companies that have paid increasing dividends to its shareholders consecutively for more than 25 years. Other S&P 500 dividend aristocrats in the medical device industry include Becton Dickinson (BDX), Medtronic (MDT), and Abbott Laboratories (ABT).  To gain exposure to Johnson & Johnson (JNJ), investors can consider the WisdomTree Dividend Growers ETF (DGRW).

Johnson & Johnson has reached a dividend payout ratio of ~53%. Its dividend yield is ~2.8%, which is estimated to be above the market average. The company’s ten-year dividend growth rate is about 8%.

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