Amidst the rising concerns of continued rate hikes and recession in the economy, healthcare giant Johnson & Johnson (JNJ - Get Rating), with its record of 60 consecutive years of dividend growth, could help ensure a stable source of passive income in 2023. Let’s dive deeper and find out more about this dividend stock.

JNJ recently declared a cash dividend of $1.13 per share on the common stock for the first quarter of 2023, payable on March 7, 2023.

Its annual dividend of $4.52 per share translates to a 2.90% yield on the current market price, higher than its four-year dividend yield of 2.60%. The company’s dividend payouts have grown at a CAGR of 6% over the past three years.

JNJ maintained momentum in its segments during the fiscal year 2022. JNJ’s consumer Health segment’s worldwide adjusted operational sales increased 3.9% year-over-year, predominantly driven by over-the-counter (OTC) products.

Its Pharmaceutical segment’s worldwide adjusted operational sales grew 6.8% from the prior year, while the MedTech segments’s worldwide adjusted operational sales grew 6.1% year-over-year.

Joaquin Duato, Chairman of the Board and CEO of the company, said, “As we look ahead to 2023, Johnson & Johnson is well-positioned to drive near-term growth while also investing strategically to deliver long-term value.”

Furthermore, for the full-year 2023, JNJ expects its operational sales to come between $96.90 billion to $97.90 billion, while its adjusted EPS is expected to be between $10.45 and $10.65.

The stock declined marginally intraday, closing the last trading session at $155.97.

Here’s what could influence JNJ’s performance in the upcoming months:

Solid Financials

During the fourth quarter that ended December 31, 2022, JNJ’s U.S. sales increased 2.9% year-over-year to $12.52 billion. It’s selling, marketing, and administrative expenses declined 9% year-over-year to $6.51 million.

Its non-GAAP net earnings rose 9.5% year-over-year to $6.22 billion. The company’s non-GAAP EPS increased 10.3% from the year-ago value to $2.35. The company reported an operational adjusted net earnings per share of $2.46.

Favorable Analyst Estimates

Analysts expect JNJ’s revenue to increase 2.9% year-over-year to $97.65 billion in the fiscal year 2023. The company’s EPS is expected to grow 3.6% year-over-year to $10.51 in the current year. Moreover, it has surpassed the consensus EPS estimates in all four trailing quarters, which is impressive.

In addition, the company’s revenue and EPS for the fiscal second quarter ending June 2023 are expected to grow 1.7% and marginally year-over-year to $24.44 billion and $2.61, respectively.

High Profitability

JNJ’s trailing-12-month gross profit margin of 67.36% is 20.9% higher than the 55.70% industry average. The stock’s trailing-12-month EBITDA margin of 34.46% is 824.9% higher than the industry average of 3.73%. Its 0.51% trailing-12-month asset turnover ratio is 53.6% higher than the industry average of 0.33%.

Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 23.79%, 14.21%, and 9.57% compared to the negative industry averages of 39.86%, 22.11%, and 30.62%, respectively.

POWR Ratings Show Promise

JNJ has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. JNJ has a grade A for Stability, consistent with the stock’s 24-month beta of 0.32.

In addition, it has a B grade for Quality, in sync with its higher-than-industry profitability metrics.

JNJ is ranked #6 out of 173 stocks in the Medical – Pharmaceuticals industry.

Click here to access JNJ’s Growth, Momentum, Value, and Sentiment ratings.

Bottom Line

JNJ continues to advance its innovative portfolio and pipeline through strategic partnerships and acquisitions.

Moreover, the company is committed to returning value to its shareholders through attractive dividends. Hence, the stock might be a solid buy.

How Does Johnson & Johnson (JNJ) Stack up Against Its Peers?

JNJ has an overall POWR Rating of A. Check out these other stocks within the Medical – Pharmaceuticals industry with an A (Strong Buy) rating: Novo Nordisk A/S ADR (NVO - Get Rating), Bristol-Myers Squibb Co. (BMY - Get Rating), and Novartis AG ADR (NVS - Get Rating).

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JNJ shares were unchanged in premarket trading Monday. Year-to-date, JNJ has declined -10.86%, versus a 4.46% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

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