Johnson and Johnson face challenges, including legal and regulatory woes and slow top -level growth.
The health care manager has a solid and more diverse business that can overcome these wind winds.
J&J has increased its dividend for 62 consecutive years.
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There are hundreds of dividend shares on the market, but not everyone offers the same level of security. Some did not increase benefits a year. Others can provide irregular dividend hikes that are likely to stop if economic tanks or a particular company problems arise. Still others have reduced benefits in recent years.
This is not the one who is looking for income seekers. Instead, dividend investors want corporations that constantly increase their benefits, preferably each year, and it is unlikely to stop even when they are in the wind.
One company that has what you need to do Johnson and Johnson(NYSE: JNJ); That is why this long -term dividend payer is worth keeping permanently.
Let’s start with Johnson & Johnson Bears. She has dealt with several questions over the past few years. We will consider three.
First, it is still confronted with a litany of trial related to the products created by TALK, which allegedly gave consumers cancer. Recently, the company failed to put on the lid for most of these lawsuits when the judge suspended the attempt to settle with most plaintiffs. So it seems that this wind will continue.
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Second, recent changes in US regulation can eventually harm its income. The US Medicare and Medicaid Services Centers (CMS) now have the power to negotiate the prices of some drugs Medicare. In the first phase of the negotiations, there are three J&J medicines: Blood Diluent Xarelto, immunosuppressan stelara and medicine for blood cancer imbruvica. Medicare will be reduced by high prices for all patients.
Third, the company faced relatively slow income growth. Despite all this, Johnson and Johnson look like an attractive long -term choice for dividend seekers.
J&J accidentally became one of the largest health care companies in the world. The company has constantly developed newer and better products in its pharmaceutical and medical technology business. It boasts a deep group of drugs in several therapeutic areas, including immunology, oncology, infectious diseases and neuroscience. It contains more than 10 drugs that each earns more than $ 1 billion in annual sales.
Its Med-Tech unit is also diverse in several areas. Its pipeline has several dozen programs. The drug manufacturer constantly earns brand new approvals or the development of labels. In other words, he has an incredibly solid basic business that is well prepared to solve the challenges faced.
Xarelto, Stelara and Imbruvica will only take effect next year. And even then, they will have a minimal impact on the results of the company, as none of these medicines have any long -term growth plans. Sales of Stelara and Imbruvica are already declining due to competitive pressure (from generic drugs or otherwise). And while Xarelto’s revenue was moving in the right direction in the first quarter, the US Food and Drug Administration recently confirmed the first generic drug of the drug.
There will be more negotiations on Medicare prices, and no one knows which drug they will prescribe. But in the long run, Johnson and Johnson should be able to solve the problem. This can avoid negotiations on prices by decreasing treatments that are mostly released by Medicare, an elderly program.
And this is just one option to allow the company’s deep pipeline and the ability to generate consistent cash flows. J&J has been in existence for over 100 years; In the past, changes in regulatory modes had to be addressed.
Although the company’s revenue growth was slow, recently the decision to abandon its consumer health department to focus on its biofarm and Med-Tech segments, partly had to solve the problem. Expect a stronger income growth as more attention is paid to the opportunities of greater growth in two remaining units.
Finally, Johnson and Johnson have a higher credit rating than the US government. Even the allegation of claims has not changed it, which is a strong evidence that it has financial opportunities to deal with these challenges. The previous judge terminated J&J’s attempt to resolve these claims through bankruptcy maneuver to one of its subsidiaries, partly because the company’s firm financial position does not institute bitterness, despite claims.
What about dividends? Johnson & Johnson is a king of dividends with a 62 consecutive year in a row, increasing under the belt. The health care leader should continue to march their dividends, which now give a market bruising for 3.4% for a long time.
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Prosper Junior Bakiny holds Johnson & Johnson positions. The Motley fool recommends Johnson and Johnson. The Motley fool has a disclosure policy.
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