What may surprise you is what I was reading was written back in the middle of January 2013, and the shares of JNJ were trading around $72 at that point. It referenced the fact that back then the dividend yield-to-price was nearly 3.4%.
As of Thursday, shares of JNJ hit a new 52-week high of $84.29, which drops to yield-to-price down to 2.9%. Perhaps that's why it ended the trading session lower at $83.18. Some investors are a bit queasy about getting less than a 3% dividend on what some call "The King of Dividend Growers."
Let's take a look at a one-year chart that illustrates where we have been and where we are with JNJ's stock price. This doesn't mean that JNJ isn't going to move up to $100 someday but earnings, revenue per share and the dividend itself will most likely need to go higher as well.
JNJ data by
Yet, we should also be prudent and note that as the dividend payout has increased so has the payout ratio. As of March 31, that payout ratio is now at 62%. For comparison one of its smaller competitors, Baxter International (BAX), with its 2.6% current yield-to-price, has a payout ratio of 38%. Before the U.S. markets opened on Thursday BAX announced that it achieved its first-quarter earnings and revenue expectations. The company also triumphantly confirmed its full-year guidance. Let's focus for a minute on what BAX does to drive sales growth and EPS numbers.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV