Is Johnson & Johnson a good dividend stock to buy now?

Johnson & Johnson (JNJ -0.05%) In the eyes of investors, a lot will happen. Pharmaceutical sales are growing thanks to recently released blockbuster drugs. Recently, the medical technology business has been growing faster than pharmaceutical sales due to the influx of elderly people needing knee and hip replacements.

Warren Buffett doesn’t seem too pleased with the stock, even though the company has a pair of business units that continue to move in the right direction. last year, Berkshire Hathawaythe holding company that Buffett has run since 1965, liquidated its year-old Johnson & Johnson position.

Is J&J still a good dividend stock to buy? Let’s take a closer look at its recent performance to find out.

Why You Should Buy Johnson & Johnson Stock Now

Johnson & Johnson is known for its consumer health brands, many of which date back more than 100 years. After spin-off Kenbu But last year it no longer sold consumer goods. These days, J&J has only two operating segments that are growing much faster than its traditional consumer health division.

Last year, J&J reported pharmaceutical revenue up 7.2% year over year, ignoring the rapid evaporation of COVID-19 vaccine sales. During the COVID-19 emergency, older adults have avoided doctor visits that lead to surgeries (and J&J medical device sales), but no more. The company reported that medical technology sales surged 12.4% compared to the same period last year, ignoring exchange rate effects.

J&J has increased its dividend by 32.2% over the past five years. If sales of its consumer health brands don’t plateau, the company’s dividend growth rate could improve significantly. For 2024, management expects adjusted earnings per share to increase 7.3% at the midpoint of the guidance range.

Oncology sales could push J&J’s growth rate even higher. In January, the company sent an application to the Food and Drug Administration to expand the patient population for its blood cancer drug darzalex to include patients with newly diagnosed multiple myeloma. Adding Darzalex to standard treatment reduced patients’ risk of disease progression or death by 58% during the trial.

Also in January, the FDA fully approved Balversa, a targeted treatment for a genetically defined group of bladder cancer patients whose disease has relapsed or failed to respond to initial treatment. In the Thor trial, Balversi reduced the risk of death in these patients by 36% compared to standard chemotherapy.

Why you should be careful

Shares of Berkshire Hathaway, Warren Buffett’s holding company, have risen approximately 3,986,240% since he took office in 1965. This impressive performance has investors around the world paying close attention to Berkshire’s stock trading activities.

Berkshire appears to have sold approximately 327,000 shares in the third quarter of 2023 to liquidate its J&J position. Before assuming the worst, it’s important to realize that Buffett likes to invest in companies he fully understands.

The pharmaceutical and medtech industries are complex sectors that Berkshire tends to avoid. With this in mind, we can speculate that it was probably the Kenvue spinoff rather than problems with the remaining operating units that caused Berkshire to stop investing in J&J.

Image source: Getty Images.

Would you like to purchase now?

J&J stock is currently trading at 14.8 times the midpoint of management’s 2024 adjusted earnings expectations. This price is fairer for a company that grew its adjusted earnings by a double-digit percentage last year and can continue to report strong single-digit earnings. -Digit percentage in the next few years.

J&J’s stock offers a 3% dividend yield at recent prices. There are high-yield pharmaceutical stocks you can buy now, but none of these companies have the praise of the large medtech sector. with drugs and A gimmick to boost dividends, this stock looks like a smart stock for income-seeking investors to buy now and hold for the long term.