Johnson & Johnson Remains One Of Our Favorite Dividend Growth Gems

Oct.29.13 | About: Johnson & (JNJ)

Dividend Growth Newsletter portfolio holding Johnson & Johnson (NYSE:JNJ) issued solid third-quarter results and raised its full-year earnings guidance. The firm's domestic sales jumped 1.7% while international sales leapt more than 4% from last year's period (consolidated sales were 3.1% higher -4.7% adjusted for negative currency impacts). We were particularly pleased with performance from J&J's pharmaceutical division, which experienced operational revenue growth of 10%+ thanks to strength from antipsychotic INVEGA SUSTENNA, REMICADE, SIMPONI, and STELARA. Diluted earnings per share advanced nearly 9% on a year-over-year basis, to $1.04.

Looking ahead, we were also quite pleased with the company's outlook for the remainder of 2013. Johnson & Johnson upped its earnings guidance for the year to $5.44-$5.49 per share, in-line with our $5.46 per share forecast, but up from its previously-issued range of $5.40-$5.47 per share. With earnings progressing nicely, we expect free cash flow to be equally robust.

<< Johnson & Johnson's Third-Quarter Financial Tables

Valuentum's Take

Johnson & Johnson's third-quarter results showcase why we continue to like the company. The firm has built one of the most comprehensive bases of health-care businesses, generating approximately 70% of revenue from top positions in its respective markets. Its pharmaceutical portfolio remains impressive, with REMICADE having 16 indications and 75% share of the US market for IV immunology products. Plus, REMICADE has exclusivity through 2018 in the US. STELARA and SIMPONI are other key profit drivers that we're watching closely. We continue to hold this dividend gem in the portfolio of our Dividend Growth Newsletter, and we're comfortable paying up for quality in J&J's case.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: JNJ is included in the portfolio of our Dividend Growth Newsletter.