What Johnson & Johnson actually does
Johnson & Johnson is one of the oldest and best-known healthcare companies in the world, headquartered in New Brunswick, New Jersey. It was founded in 1886 and today focuses on two areas:
- Innovative medicine. Prescription drugs for cancer, immune diseases, neuroscience and other conditions, including products from its Janssen division.
- MedTech. Surgical tools, orthopaedic implants, cardiovascular devices and related technology.
The company used to include a large consumer-health business, with brands like Band-Aid and Tylenol. That was separated into the independent company Kenvue in 2023, leaving J&J as a more focused healthcare group.
How the business makes money
Drug sales are driven by patents and new approvals, while medical devices sell to hospitals through multi-year relationships. Having both reduces dependence on any single product line and smooths results through different parts of the economic cycle.
The dividend story
J&J has raised its dividend every year for more than 60 years, making it one of the original Dividend Kings. It pays quarterly, and the yield is usually moderate.
It is also one of only two US companies, together with Microsoft, to hold a top AAA credit rating from S&P Global. That reflects a strong balance sheet and steady cash flow, which is exactly what you want behind a long dividend streak.
What to keep an eye on
- Patent expiries. Big drugs eventually face generic or biosimilar competition.
- Legal liabilities. The company has faced large lawsuits, including those related to talc products.
- Drug pricing policy. Government pricing rules can reduce revenue.
- Pipeline. New drugs need to replace aging ones.
Quick take
J&J is a textbook defensive dividend stock: a healthcare leader with a very long increase record and a high-quality balance sheet. Compare its payout ratio and growth with other defensive names in the guides below.