Johnson & Johnson is one of the world’s largest and most successful companies. It is a healthcare and consumer goods company with operations in 60 countries. The company was founded in 1886 by Robert Wood Johnson and his brothers, Edward Mead Johnson and James Wood Johnson. The company has over 140,000 employees worldwide, and its products are sold in over 175 countries. The company also manufactures baby products such as baby shampoo and powder, and Desitin diaper rash cream. The company was ranked #37 on the Fortune 500 list of the largest U.S. companies by revenue for 2022.
Johnson & Johnson has a long history of innovation. The company’s most popular products include Band-Aid adhesive bandages, Tylenol pain relief medication, and Listerine mouthwash. The company has also been a leader in research and development, with a strong focus on improving global health. In recent years, Johnson & Johnson has developed new treatments for conditions like cancer and HIV/AIDS. With such a diversified portfolio, Johnson & Johnson can offer consumers complete solutions for their health and well-being needs. The company’s focus on innovation has resulted in many ground-breaking products that have improved the lives of millions around the globe. In November 2021, the Company announced its intention to separate the Consumer Health business to create a new, publicly traded company. Johnson & Johnson targets completion of the separation within 18 to 24 months after the initial announcement.
Business Model
Johnson & Johnson is organized into three business segments: Consumer Health, Pharmaceutical, and Medical Devices. The company’s largest segment is Pharmaceutical which accounted for 55.3% of Johnson & Johnson’s total revenue in January 2022. The Medical Devices segment was the second largest, accounting for 28.9%% of total income, while the Consumer Health segment was the smallest, accounting for 15.6% of total revenue.
The Consumer Health segment offers a wide range of over-the-counter products that provide solutions for common health and wellness needs, including those for colds, flu, digestive health, pain relief, skincare and women’s health. Johnson & Johnson is a reliable source of affordable, effective consumer health products with a long history as a trusted brand and a commitment to quality. The company’s products are available at major retailers worldwide, making it easy for consumers to find the right solution for their needs. Johnson & Johnson’s Consumer Health segment has something for everyone, from everyday essentials to specialized solutions. With a wide selection of trusted portfolio brands and affordable prices, the company is a top choice for consumers looking for reliable over-the-counter health solutions.
The Medical Devices segment offers a broad range of products used in diagnostics, surgery, and patient care. The company’s Medical Devices segment provides a wide range of innovative products essential for diagnostics and surgery. The segment has been growing steadily in recent years, driven by strong global demand. In addition, the products offered by the Medical Devices segment are highly competitive and provide superior quality to other products available in the market. As a result, the Medical Devices segment is an important growth driver for Johnson & Johnson and is expected to continue driving growth in the future.
Lastly, the Pharmaceutical segment provides a portfolio of prescription medicines to treat various diseases and conditions, such as immunology, infectious diseases, neoplastic diseases, and cardiovascular and metabolic diseases. Johnson & Johnson’s Pharmaceutical segment offers a wide range of treatments, many of which are market leaders. In addition, the segment’s strong product portfolio and commitment to innovation have helped it to weather the challenges of the past few years, including patent expirations. Looking ahead, the Pharmaceutical segment is well-positioned for continued growth thanks to several essential pipeline products nearing commercialization.
Dividend Profile
Overall, Johnson & Johnson has a diversified business model that offers opportunities for growth and shareholder value creation. The company’s strong market position in each of its businesses gives it the scale and scope to continue to deliver superior results for shareholders over the long term. The company’s stock has a current dividend yield of 2.71% and a payout ratio of 52.8%.
Since 2013 Johnson & Johnson’s dividend per share has been increasing at a CAGR of 4.93%. In total, Johnson & Johnson has increased its dividend for 60 consecutive years, making it a Dividend Aristocrat, a group of companies that have increased their dividend for at least 25 consecutive years.
In recent years, the company has been sued for allegedly causing consumer injuries with its product and misleading consumers about its products’ safety. This has caused damage to the company’s reputation and has led to and resulted in decreased sales. In particular, the company is facing lawsuits over its DePuy ASR™ XL Acetabular System and DePuy ASR™ Hip Resurfacing System product. As of January 2, 2022, there were approximately 250 plaintiffs in the United States with direct claims in pending lawsuits regarding injuries allegedly due to the DePuy ASR™ XL Acetabular System and DePuy ASR™ Hip Resurfacing System. If Johnson & Johnson is found liable in these lawsuits, it could be required to pay out billions of dollars in damages or even bans on some of its products. If Johnson & Johnson cannot resolve these legal issues, its share price could drop significantly.
Business Risk
Despite its size and stature, Johnson & Johnson faces several risks that could impact its business. In the wake of recent product recalls and lawsuits, Johnson & Johnson is facing increased regulatory scrutiny. The company has been embroiled in controversy in recent years, with several of its products being recalled for safety concerns. These controversies have led to increased scrutiny from regulators, who are now taking a closer look at the company’s operations. Johnson & Johnson is facing questions about its manufacturing processes, quality control procedures, and marketing practices.
For example, the company is facing lawsuits over its DePuy ASR™ XL Acetabular System and DePuy ASR™ Hip Resurfacing System product. As of January 2, 2022, there were approximately 250 plaintiffs in the United States with direct claims in pending lawsuits regarding injuries allegedly due to the DePuy ASR™ XL Acetabular System and DePuy ASR™ Hip Resurfacing System. If Johnson & Johnson is found liable in these lawsuits, it could be required to pay out billions of dollars in damages or even bans on some of its products.
The company is also under pressure to improve its transparency and communication with consumers. Johnson & Johnson faces several challenges in addressing these concerns, but it is committed to addressing them head-on. The company is working to improve its manufacturing processes and quality control procedures. It is also increasing its transparency and communication with consumers.
Final Thoughts
Even during the COVID-19 pandemic, Johnson & Johnson’s stock price kept its upward momentum, proving to be a reliable investment. The company’s solid fundamentals and history of paying dividends make it an outstanding dividend stock. For over 130 years, Johnson & Johnson has been a trusted name in healthcare. The company’s products touch nearly every aspect of healthcare, from baby products to life-saving medical devices. This diversification has helped Johnson & Johnson weather economic downturns and political turmoil. Investors looking for a reliable dividend stock should consider Johnson & Johnson. The company has increased its dividend payments for 60 consecutive years and currently yields 2.71%. With a strong balance sheet and cash flow, investors can expect Johnson & Johnson to continue paying dividends for years to come.