What Is Considered a Good Stock Dividend? 2 Healthcare Stocks That Fit the Bill.

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What characteristics make a stock suitable for dividends? While preferences can vary, there are some common qualities that become apparent when considering examples like Johnson & Johnson (JNJ) and Medtronic (MDT). Here’s a rundown of key aspects and reasons why they match the criteria.

What makes a stock pay dividends well? While opinions may differ, there are shared traits that stand out when examining companies such as Johnson & Johnson (JNJ) and Medtronic (MDT). Here’s what you should look for and why these stocks might be good choices.

Johnson & Johnson is a Dividend King

As a fervent observer, one recurring element that stands out in these two instances is unwavering consistency. In this regard, Johnson & Johnson truly shines, boasting more than six decades of consecutive annual dividend increases – a testament to their steadfast dedication to shareholder returns. This remarkable feat earns them a spot among the Dividend Kings, an exclusive club of companies renowned for their long-term commitment to dividends.

I must admit, owning Johnson & Johnson (J&J) on its own might not be the sole reason that sparked my interest. However, what truly seals the deal is its substantial and strategically placed business empire, spanning both medical devices and pharmaceuticals. The company’s robust Research and Development (R&D) efforts and exceptional marketing strategies are undeniably key factors that make J&J a trailblazer in the industry.

In simpler terms, even though there are other factors to consider, Johnson & Johnson’s current dividend yield of 3.4% makes it a more attractive investment compared to the 1.3% yield of the S&P 500 index and the average healthcare stock’s approximately 1.8%. Moreover, this yield is near the higher end of its historical range, suggesting that Johnson & Johnson might be undervalued in today’s market.

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The predicament lies in the fact that Johnson & Johnson finds itself embroiled in a massive class-action lawsuit concerning talcum powder, with the outcome yet to be decided. This situation has created a gap in knowledge for investors, as the company is restricted from discussing the lawsuit in detail. Nevertheless, potential investors who are comfortable with some level of uncertainty may find Johnson & Johnson an attractive choice for a dividend stock due to its other favorable characteristics.

Medtronic is closing in on Dividend King status

Medtronic, a prominent player in the global medical device market like Johnson & Johnson, has consistently boosted its dividend for 48 consecutive years, with only two more years required to earn the title of a “Dividend King.” This impressive feat showcases Medtronic’s robust Research and Development (R&D) capabilities, marketing skills, and crucial role in supplying the healthcare sector.

I find myself observing that Medtronic’s dividend yield currently stands around 3.2%. Compared to the wider market and healthcare sector, this yield appears quite appealing. Interestingly, it also seems to be near the upper limit of the company’s historical yield range, indicating that the device maker might be offering an attractive price point today.

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For Medtronic, like Johnson & Johnson, there’s a compelling reason behind their high returns. Previously, Medtronic experienced a phase where research and development weren’t generating new inventions, leading to a slowdown in growth. However, it seems that this situation is shifting: Fresh products are now entering the market (it’s common for innovation to come in waves), and the management is revising the business strategy to prioritize its most profitable and rapidly expanding sectors. If Johnson & Johnson’s legal issues are a concern, Medtronic might be a more appealing choice for you.

Balancing the good and bad with dividends

As an ardent investor, I’ve discovered numerous fantastic dividend stocks that consistently deliver impressive returns. However, these gems often come with lower yields due to their widespread recognition on Wall Street. To truly stand out as a top-tier dividend stock, it’s essential for the yield to not only be reliable but also enticing – a quality both Johnson & Johnson and Medtronic possess.

In essence, high-profit stocks often possess characteristics that might appear concerning. Whether or not such a stock suits your dividend portfolio hinges on how you perceive and handle these issues. For instance, Johnson & Johnson’s uncertainty lies in the ongoing lawsuit, which could deter some investors. On the other hand, Medtronic’s challenge is its slow growth, a trend that seems poised for change.

Both firms are solid choices, offering higher-than-average returns. The best dividend stock for you hinges on your tolerance for risk – the greater your ability to manage uncertainty, the more volatile stocks you might consider.

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2025-07-23 11:24