When markets are volatile and uncertain, investors seek stability. You can find stability in dividend stocks, especially Dividend Kings, which have a track record of consistently paying and growing dividends for more than 50 years. Johnson & Johnson (JNJ), one of the world’s largest and most diversified healthcare companies, is one such dividend king.
Although Johnson & Johnson isn’t a high-growth stock, it quietly outperformed the market last year. JNJ shares soared 43.7%, while the market as a whole rose 16.6%. One month into 2026, the stock is up more than 10%, outpacing the S&P 500 Index ($SPX).
Johnson & Johnson’s recent fourth-quarter results reveal why you should buy and hold this dividend stock if you haven’t already.
In 2023, Johnson & Johnson made the bold decision to spin off its consumer division (which consists of well-known everyday brands such as Tylenol, Listerine, Neutrogena, etc.) into an independent company called Kenvue (KVUE). The goal is to build a pure-play healthcare innovation business focused on pharmaceuticals and medical devices. This decision worked very well. Today, its business is mainly divided into two parts:
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Innovative Medicine (Pharmaceuticals) focuses on the development of prescription drugs in the areas of oncology, immunology, neurology, cardiovascular and pulmonary diseases.
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MedTech (Medical Devices) refers to medical technology used by hospitals and surgeons.
The Innovative Medicines segment generates most of Johnson & Johnson’s revenue and drives much of its growth. In the fourth quarter, the segment achieved revenue of $15.7 billion, a year-on-year increase of 10%. Full-year revenue for the segment increased 6% to $60.4 billion. The company reported that global sales rose 5.3% to $94.2 billion, despite significant headwinds from the loss of Stelara exclusivity. Adjusted diluted earnings per share increased 8.1% year over year to $10.79.
Operating sales will grow 21% in 2025 and annual sales are expected to exceed $50 billion by 2030, with oncology remaining one of the company’s largest growth engines. Meanwhile, revenue in the medical technology segment rose 7.5% in the fourth quarter and 6.1% for the full year, driven by its cardiovascular, surgical and vision businesses, with sales reaching $34 billion. With over 60 active clinical trials and multiple regulatory submissions planned, medtech will continue to be the second major growth pillar after pharmaceuticals.
Together, Johnson & Johnson’s two business areas make money from important medical devices and life-saving drugs. Its diverse healthcare empire isn’t tied to a single product or trend. Because of this, the company’s earnings tend to be relatively stable even during recessions, allowing it to pay and raise its dividend for 63 consecutive years. The company will generate $19.7 billion in free cash flow by 2025, increasing its ability to fund innovation while returning value to shareholders.
Its strong balance sheet, continued cash generation and unparalleled pipeline enable it to invest heavily in future growth while maintaining shareholder returns. It maintains a reasonable forward payout ratio of 41.4%, and its forward dividend yield of 2.3% is also higher than the healthcare industry average of 1.6%.
Management expects operating sales to grow approximately 6% in 2026, with total revenue expected to exceed $100 billion. Adjusted earnings per share (EPS) are expected to rise to around $11.53, in line with consensus estimates. The company expects earnings growth to be supported by continued product launches, operating efficiencies and expanding margins. Free cash flow is expected to increase to approximately $21 billion, giving the company more flexibility to invest and reward shareholders.
The consensus rating on JNJ stock is “Moderate Buy.” Of the 26 analysts covering the stock, 13 rate it a Strong Buy, 3 rate it a Moderate Buy, and 10 rate it a Hold. JNJ has surpassed its average price target of $226.36. However, its high price target of $265 implies potential upside of 16.4% over the next 12 months.
On the date of publication, Sushree Mohanty did not hold (either directly or indirectly) any securities mentioned in this article. All information and data in this article are for reference only. This article was originally published on Barchart.com