1) Solid financial health. JNJ is a solid company and most of us should be concur on this point.
2) Market price valuation is at $63.16.
3) Payout ratio is very high, at 63%, which is out of my criteria range of less than 50%.
4) Yield is high, at 3.6%.
5) Dividend growth is optimal. 5-year dividend growth at 9.11%, 10-year dividend growth at 12.39%.
In the past 32 years , JNJ maintained a good history record of increasing dividend every year versus previous year.
With 10-years annual dividend growth rate at 12.39%, we can achieve 9.95% yield on cost even without considering dividend reinvestment. If we wait till the market price pulls back a little to $63, we can achieve 10.59% within 10 years. If considering dividend re-investment, the percentage will be much higher.
Disclosure: Long JNJ.
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