2021 Week 17: Johnson & Johnson (NYSE: JNJ)

Portfolio Update

The FiveTwenty portfolio received no dividends in the past week.

Past Week Dividend$0
Current Quarter Dividend (Q2 2021)$0
LifeTime Dividend$113.04
Estimated Annual Dividend$1,308.32
Dividend Scorecard

The capital allocation for the week of 04/25/2021 to 05/01/2021 will be used to add to our position in Johnson & Johnson (NYSE: JNJ)

JNJ – Position Update

Since our last check-in on JNJ a mere 3 weeks ago in week 14 of 2021, the company reported Q1 2021 results and raised its quarterly dividend on 04/20/2021. Additionally, the share price has moved higher by 1.05% from $162.83 to $165.52.

TTMPrev. Update10-year median
Dividend Streak59 years58 years
Yield2.47% (MRD 2.56%)2.48%2.75%
Payout Ratio49.15%149.44%2NA3
P/E19.89120.272NA3
Entry Criteria Scorecard

1 compute using TTM adjusted EPS of $8.32 as of Q1 2021
2 computed using TTM adjusted EPS of $8.03 as of Q4 2020
3 no comparable data computed on adjusted earnings is available

Q1 2021 earnings report

Did JNJ’s latest earnings report raise any warning flags?

Led by above market growth of the Pharmaceutical business and continue recovery of the Medical Devices business, JNJ grew both revenue and earnings in Q1 2021 compared to the same period a year ago. Revenue grew 7.9%, adjusted net earnings increased 12.5% and adjusted EPS were 12.6% higher. The Medical Devices business, in particular, benefited from the market recovery from COVID-19 impacts in the prior year.

Revenue
(in millions)
Adj. Net Income
(in millions)
Adj. EPS
.
Q1 2020$20,691$6,154$2.30
Q1 2021$22,321$6,924$2.59
% Change7.9%12.5%12.6%

Additional noteworthy developments during the quarter:

  • Also on 04/20/2021 JNJ raised it quarterly dividend by 5% from $1.01 to $1.06. The raise takes effect with the Q2 2021 dividend payable on June 8, 2021. The raise represents the 59th consecutive yearly increase.
  • JNJ’s single shot COVID-19 vaccine was authorized in the US (02/26), EU (03/11) and by the WTO (03/12). The rollout of the vaccine was paused on 04/13 due to reports of rare but sever blood cloths. Finally, on 04/20 JNJ announced that roll-out will resume in Europe following a review of the cases involving blood cloths by the European Medicines Agency. Following that on 04/23 JNJ announced that the vaccinations will resume in the US after being cleared by the CDC and FDA.

Looking ahead, the company reiterated its previous full year 2021 guidance and narrowed the ranges for revenue and adjusted net earnings. The new guidance is revenues in the range of $90.6 to 91.6 billion and adjusted EPS in the range of $9.42 to $9.57.

Thesis

Why are we adding to our position in JNJ?

The solid Q1 2021 financial performance confirmed our original investment thesis. Additionally, it was nice to see our expectation of a Q2 2021 dividend raise met.

Finally, all recent developments re-confirmed JNJ’s status as a reliable source of growing dividend income for the forseeable future.

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