Johnson & Johnson has a very healthy financial profile and growth prospects.
Johnson & Johnson (JNJ -0.02%) is one of the world’s best dividend stocks. The healthcare giant has increased its dividend payment for 63 consecutive years. That’s one of the longest dividend growth track records among publicly traded companies, firmly entrenching its elite status as a Dividend King, which are companies that have raised their dividends yearly for 50 years or more.
The iconic healthcare company currently has a 2.7% dividend yield, which is more than double the S&P 500‘s (^GSPC -0.16%) level. Johnson & Johnson backs its high-yielding payout with one of the healthiest financial profiles in the world. That was evident in its recent third-quarter earnings report and plans for the future.
Image source: Johnson & Johnson.
The quarterly financial health checkup
Johnson & Johnson recently declared its fourth-quarter dividend payment of $1.30 per share. The payment announcement coincided with the company’s release of its third-quarter financial results. Those numbers once again confirmed the health of its business and dividend payment.
The healthcare company reported $24 billion in sales during the period, up nearly 7% compared to the prior-year period. Meanwhile, its adjusted net income topped $6.8 billion, an almost 16% jump compared to last year.
Johnson & Johnson also continues to produce a healthy amount of free cash flow. It has generated roughly $14.2 billion through the first nine months of this year, just shy of the nearly $14.5 billion it produced in the same period of last year. That has easily covered its dividend payment, which was $3.1 billion in the quarter and $9.3 billion year to date.
Meanwhile, the company maintains one of the healthiest balance sheets in the world. It ended the quarter with $19 billion in cash against $46 billion in debt, which supports its pristine AAA bond rating (tied for the best in the world).
The healthy growth should continue
The company expects to continue delivering healthy financial results in the future. Its strong performance in the third quarter gave it the confidence to boost its full-year sales outlook. It now expects its sales to grow by 5.7% at the midpoint of its updated outlook, to $93.7 billion. That higher revenue growth rate will help offset higher costs, allowing the company to maintain its adjusted earnings growth outlook of an 8.7% increase at the midpoint to $10.85 per share.
Meanwhile, the company unveiled plans to take the next step in its strategy of becoming an innovation powerhouse. It plans to separate its orthopedics business to sharpen its focus on its six priority growth areas: oncology, immunology, neuroscience, cardiovascular, surgery, and vision. That separation could take many forms, including following the successful blueprint it established as it completed a multistage exit of its former consumer healthcare business, Kenvue.
After the separation, Johnson & Johnson expects to deliver faster growth and higher margins. The company also aims to maintain a strong balance sheet, sustain significant investments in research and development, and continue to increase its dividend annually. Johnson & Johnson will also have ample financial flexibility to pursue value-creating acquisitions and share repurchases.
A core focus area for the company remains growing its oncology business. The company set an ambitious goal earlier this year to target $50 billion in oncology sales by 2030. It aims to achieve that goal by continuing to be a world leader in R&D investment (over $10 billion year to date), while enhancing those efforts through strategic M&A.
Last year, the company bought Ambrx for $2 billion to bolster its oncology pipeline. Meanwhile, Johnson & Johnson was recently reportedly in talks to acquire Protagonist Therapeutics, which, in addition to developing an oral treatment for immune diseases in partnership with Johnson & Johnson, has a late-stage blood cancer drug candidate.
Johnson & Johnson’s continued investments in oncology and other core priority areas position the company to support ongoing dividend growth in the years ahead, reinforcing its commitment to returning value to shareholders.
A very healthy dividend stock
Johnson & Johnson is a financial fortress that generates strong free cash flow. That gives it the funds to pay its high-yielding dividend and reinvest in growing its business. Given its financial strength and healthy growth profile, it’s one of the safest high-yielding dividend stocks you can buy.
Matt DiLallo has positions in Johnson & Johnson and Kenvue and has the following options: short December 2025 $16 puts on Kenvue. The Motley Fool has positions in and recommends Kenvue. The Motley Fool recommends Johnson & Johnson and Protagonist Therapeutics and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.