Johnson & Johnson

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You won't find a better core income holding than Johnson & Johnson ( JNJ). The $202 billion healthcare stock has its hands in everything from consumer products like Band-Aid brand bandages to pharmaceuticals and medical devices.

That diversification provides some big benefits for JNJ -- and it helps provide some big dividend payouts as well. As I write, Johnson & Johnson pays a 61-cent quarterly dividend for a 3.33% yield. I think that number is likely to get hiked in the next quarter.

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Johnson & Johnson carries the huge profitability of a pharmaceutical company without all of the risks of big patent drop-offs looming on the horizon. Note that I said all the risks; JNJ certainly carries some of them. This year, the firm is set to lose patent protection of a couple of important drugs. That said, the effects of the patent losses should be mitigated by strength elsewhere in JNJ's business, especially in demand tailwinds that are only just starting to pick up for investors.

Another big draw for Johnson & Johnson is cash. The firm has around $20 billion of it before its $16.8 billion of debt is accounted for, and even then JNJ is better capitalized than most peers. This firm earns enormous free cash flows each year, and now, with major acquisitions behind it, management will be able to deploy more of that cash for dividends.

As of the most recently reported quarter, J&J was one of George Soros' top holdings and also showed up in Bridgewater Associates' portfolio.

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