Johnson & Johnson (JNJ) Just Gave Us a 5% Raise

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Why do we put so much time and effort into building our dividend stock portfolio?

The answer is … because companies will give us a raise (normally every year) for doing nothing at all!

It doesn’t get much easier than that, when it comes to building a sustainable income stream. Of course there is a lot of upfront time and effort (and capital) required in order to make it work.

We are not even half way through the year and already have received over 10 different raises from companies that we own! I don’t know about you but I have not received that many raises from my employer … ever!

Most of these raises are small (under 5%) but some of them are huge. One company gave us a 21% increase this year!

The most recent dividend increase (or raise) from a stock we own was from Johnson & Johnson (JNJ).

JNJ Shareholders Get a 5% Raise

Johnson & Johnson (JNJ) recently announced an annual dividend increase. The company has been consistently raising annual dividends for over 55+ years … which is way too cool!

Company shareholders will now receive $0.84 in quarterly dividends for each share they own … instead of $0.80 paid last quarter. This increase comes in just slightly below our desired dividend growth rate of at least 6%.

The latest increase bumps the annual dividend for JNJ up to $3.36 per share compared to $3.20 last year.

Overall, that is a 5.00% increase in dividend income.

How Much Extra Income?

We currently own 51.897 shares of JNJ in our Money Sprout Index.

This latest dividend increase has pushed our 12 month forward dividend income for JNJ up to $174.37, compared to $166.07 last quarter.

That is an annual dividend income increase of $8.30 – which is one of the highest dollar amount increases we have seen.

This increase is simply a reminder that our dividend portfolio is constantly growing every single day … without any extra work from us..

Dividend Growth for JNJ

We have owned shares of Johnson & Johnson for 7 years … which makes it one of our longest held stocks.

Overall, the company has shown the ability to grow their dividend for over 50+ consecutive years. It slowed down just a little this year but still has been consistent over time.

Take a look at the annual dividend payments since 2010 –

  • 2010 – $2.11
  • 2011 – $2.25
  • 2012 – $2.40
  • 2013 – $2.59
  • 2014 – $2.76
  • 2015 – $2.95
  • 2016 – $3.15
  • 2017 – $3.32 (projected)

Note – The 2017 dividend has been adjusted to reflect a dividend increase after the first quarter.

As you can tell from the numbers above, JNJ dividends have been raised consistently over the past several years.

Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher. Johnson & Johnson has fallen in range of maintaining a dividend growth rate above the 6% (or higher) that we look for in a stock for an extended period of time.

Here are a few average growth rates for shares of Johnson & Johnson

  • 1 Year DGR – 5.40% (2016 to 2017)
  • 3 Year DGR – 6.35% (2014 to 2017)
  • 5 Year DGR – 6.71% (2012 to 2017)
  • 7 Year DGR – 6.69% (2010 to 2017)

Just look at how steady Johnson & Johnson has kept their dividend growth. That is the sign of a great company and solid dividend growth. It is one of the reasons why this company is our largest holding in our dividend income portfolio.

Note – We calculated the 7 year DGR as that is how long we have owned shares in JNJ.

Based on holding our shares for 7+ years now, we are earning a yield on cost of 3.57%. That is a great yield that continues to grow as the company raises its dividend every year.

Johnson & Johnson – Buy, Sell, or Hold?

Back in April 2010, we purchased 15 shares of Johnson & Johnson for $65.11 per share. Since that time, we have bought an additional 33 shares through our Fidelity and Robinhood accounts.

At the time of this writing, JNJ is our largest holding in the Money Sprout Index. It currently makes up 6.9% of our overall portfolio.

Since that first purchase, we have earned $356.16 in dividends from the company!

Here are a few stats from owning stock in Johnson & Johnson for the past 7 years-

  • Total Investment – $4,885.20
  • Shares Purchased – 48
  • Dividends Earned – $356.16
  • DRiP Shares – 3.89

To date, we have earned back 7.3% of our original investment … just in dividends! That just goes to show you the power of holding on to quality dividend paying companies.

At the time of this writing, JNJ also meets our stock screen criteria based on the following metrics –

  • Current Yield – 2.72%
  • Payout Ratio – 56.47%
  • P/E Ratio – 20.75

Note – The only exception is the P/E ratio is a little above our threshold.

The company meets the current yield requirement of being greater than (or equal) to 2% as well as a the payout ratio less than 60%,

It falls short on P/E coming in just above our criteria of under 20.

Based on our current allocation of JNJ, we have it as a HOLD for our portfolio. While Johnson & Johnson has been a solid rock in our portfolio for many years … we can’t justify adding new money in the company based on our current holdings.

However, if you are just starting out with your portfolio, this stock could be a solid foundation to start with.

Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – JNJ. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.

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