JNJ: 3 Dividend Aristocrats Every Investor Should Own

Dividend Aristocrats are companies with a track record of increasing dividends for 25 consecutive years or more and are often considered a cornerstone of a reliable investment strategy. These stocks belong to stable, well-established companies that can weather economic downturns while rewarding shareholders with consistent payouts.

Amid this backdrop, it could be wise to scoop up shares of dividend aristocrats stocks Johnson & Johnson (JNJ), PepsiCo, Inc. (PEP), and Kimberly-Clark Corporation (KMB) for their resilience and long-term gains.

In the third quarter of 2024, real GDP increased at an annual rate of 3.1% year-over-year. This shift was due to factors like increased consumer spending, exports, federal government spending, and a rise in business investment.

Investors are drawn to Dividend Aristocrats for their ability to provide a stable income stream, which can act as a cushion during volatile market conditions. Further, dividend aristocrats often outperform during bear markets, owing to their defensive nature that helps preserve capital, as many of these companies operate in non-cyclical industries like healthcare, consumer staples, and utilities.

With that in mind, let’s delve into the fundamentals of the above-mentioned three Dividend Aristocrat picks.

Johnson & Johnson (JNJ)

JNJ is engaged in the research and development, manufacture, and sale of healthcare products primarily focused on human health and well-being. The company offers a diversified range of products through the Innovative Medicine segment and MedTech segment.

On January 2, the company declared a quarterly dividend of $1.24 per share, payable on March 4, to shareholders of record on February 18. With 62 years of consecutive dividend growth, JNJ pays an annual dividend of $4.96, which translates to a yield of 3.44% at the current share price. Its four-year average dividend yield is 2.74%. Also, the company’s dividend payouts have increased at a CAGR of 5.5% over the past five years.

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On December 2, JNJ announced that it received the U.S. Food and Drug Administration (FDA) approval for a first-of-its-kind silicone gel-filled implant, MENTOR™ MemoryGel™ Enhance Breast Implants. This launch is the first and only implant line created specifically for women with larger breast cup sizes undergoing breast reconstruction and reconstruction revision and will be commercially available in mid-2025.

For the nine-month period that ended September 30, 2024, JNJ’s sales to customers increased 4% year-over-year to $66.30 billion. Its gross profit rose 4.5% from the year-ago value to $45.96 billion. The company’s net earnings from continuing operations amounted to $6.84 billion, representing a 15.7% increase from the same period last year. Also, its net earnings per share from continuing operations for the period increased 24.1% year-over-year to $4.38.

As per the updated guidance for the fiscal year 2024, JNJ forecasts operational sales between $89.40 billion and $89.80 billion, reflecting a 6.6% increase from 2023, primarily driven by recent acquisitions. The company also expects adjusted EPS between $9.88 and $9.98.

Street expects JNJ’s revenue for the fiscal year (ended December 2024) to increase 4.3% year-over-year to $88.78 billion. Its EPS for the same period is expected to register a marginal growth from the prior year, settling at $9.96.

Shares of JNJ have declined marginally intraday, closing the last trading session at $143.78.

JNJ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

JNJ has a B grade for Value, Stability, Sentiment, and Quality. It is ranked #11 out of 152 stocks in the Medical – Pharmaceuticals industry. Click here to see the additional ratings for JNJ (Growth and Momentum).

PepsiCo, Inc. (PEP)

PEP is a global beverage and convenience food company that engages in its manufacturing, marketing, distribution, and sales. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region.

On November 22, PEP announced its agreement to acquire the remaining 50% stake in Sabra Dipping Company and Obela. With this acquisition, PEP will become the sole owner of these refrigerated dips and spreads brands. This move should expand PEP’s portfolio in the U.S. and Canada, meeting the growing demand for nutritious, simple foods.

In the same month, demonstrating its commitment to returning value to shareholders, the company declared the 52nd consecutive quarterly dividend of $1.355 per common share, a 7% increase year-over-year. This dividend will be paid on January 6, 2025.

PEP pays an annual dividend of $5.42, which translates to a yield of 3.61% at the current share price. Its four-year average dividend yield is 2.76%. Moreover, its dividend payouts have increased at a CAGR of 7.9% over the past three years.

During the third quarter of 2024, which ended on September 7, PEP’s net revenues were $23.32 billion. Its total gross profit rose marginally from the year-ago value to $12.92 billion. Its non-GAAP operating profit stood at $4.18 billion, up 3.6% year-over-year, while its non-GAAP net income attributable amounted to $3.19 billion, representing an increase of 2.6% from the last year. Also, the company’s non-GAAP EPS for the quarter increased 2.7% year-over-year to $2.31.

The consensus revenue estimate of $27.96 billion for the fiscal fourth quarter (ended December 2024) represents a marginal increase year-over-year. The consensus EPS estimate of $1.95 for the same quarter indicates a 9.4% improvement year-over-year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.

The stock has declined marginally intraday to close the last trading session at $149.91.

PEP’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It also has an A grade for Quality and a B for Growth. Within the B-rated Beverages industry, it is ranked #11 out of 32 stocks. Click here to see PEP’s ratings for Value, Momentum, Stability, and Sentiment.

Kimberly-Clark Corporation (KMB)

KMB is principally engaged in the manufacturing and marketing of personal care and consumer tissue products in the United States. The company operates through three segments: Personal Care; Consumer Tissue; and K-C Professional.

On January 3, buoyed by strong financial performance, the company paid its shareholders a quarterly dividend of $1.22 per share. KMB pays an annual dividend of $4.88, which translates to a yield of 3.74% at the current share price. Its four-year average dividend yield is 3.52%. Moreover, the company’s dividend payouts have increased at a CAGR of 3.4% over the past five years.

KMB’s revenue for the third quarter (ended September 30, 2024) amounted to $4.95 billion. It reported an operating profit of $1.15 billion, indicating a 49.1% growth from the prior-year quarter. The company’s attributable non-GAAP net income came in at $617 million, and its EPS came in at $1.83 per share, up 4.6% and 5.2% year-over-year, respectively.

Analysts expect KMB’s EPS for the fiscal year ended December 2024, 2025, to increase 11.4% year-over-year to $7.32. Its revenue for fiscal 2024 is expected to be $20 billion.

Over the past six months, the stock has surged 6.1%, closing the last trading session at $129.77.

It’s no surprise that KMB has an overall rating of B, equating to a Buy in our POWR Ratings system. It has a B grade for Value, Sentiment, and Quality. Out of 55 stocks in the Consumer Goods industry, KMB is ranked #5.

Beyond what is stated above, we’ve also rated KMB for Growth, Momentum, and Stability. Get all KMB ratings here.

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JNJ shares were trading at $144.17 per share on Friday afternoon, up $0.15 (+0.10%). Year-to-date, JNJ has declined -0.31%, versus a 0.93% rise in the benchmark S&P 500 index during the same period.