We just lately compiled an inventory of the Top 10 Dividend Stocks To Buy According To Hedge Funds.On this article, we’re going to try the place Johnson & Johnson (NYSE:JNJ) stands towards the opposite dividend shares.
The sustained excessive inflation over the previous two years has resulted in elevated borrowing prices, posing difficulties for each companies and customers. Moreover, uncertainty surrounding potential rate of interest cuts by central banks, regulatory modifications beneath the brand new US administration, and ongoing geopolitical tensions have additional dampened financial exercise. On this difficult panorama, competitors for capital has intensified, with firms specializing in their aggressive benefits and adjusting their methods for each short-term stability and long-term development to safe important sources amid rising financial uncertainty.
Dividends have gotten more and more engaging within the present market atmosphere. A report from S&P World signifies that world dividend development noticed a big enhance in 2024, rising by 8.5%. This development was particularly notable within the Asia-Pacific area, the place authorities insurance policies inspired firms to shift from annual to semiannual dividend distributions. In the meantime, the US market skilled a surge in new and reinstated dividends, with the expertise, media, and telecommunications (TMT) sector enjoying a key function in driving this development. The report additionally identified that over the previous decade, firms throughout the broader market—excluding actual property funding trusts (REITs)—have, on common, distributed 85% of their discretionary money move (DCF), which is calculated as working money move minus capital expenditures. On common, this distribution has been divided between dividends and share buybacks, with 47% allotted to dividends and 38% directed towards buybacks.
World dividend development had been slowing because the post-COVID restoration, however that development reversed final 12 months, with the expansion fee accelerating to eight%. Shareholders obtained roughly $180 billion extra in payouts than in 2024, which got here as a shock given the prevailing geopolitical and financial uncertainties, in line with an S&P World report. The agency initiatives that whole world dividend funds will stay at $2.3 trillion in 2025.
Analysts level out that earnings development has historically been the important thing driver of dividend will increase. With sturdy earnings development recorded final 12 months, expectations for 2025 are even greater. Goldman initiatives an 11% rise in earnings per share this 12 months, up from an estimated 8% in 2024, which is anticipated to drive a 7% enhance in dividends, in comparison with a 6% rise final 12 months. In the meantime, Ohsung Kwon, a US fairness strategist at BofA Securities, holds an much more optimistic view, forecasting a 12% dividend enhance this 12 months, supported by accelerating earnings development.
Traditionally, dividends accounted for 40% of the market’s whole returns from 1936 to 2012, however their contribution has dropped to only 16% over the previous decade, in line with a BofA Securities analysis word printed late final 12 months. Nevertheless, Kwon expects dividends to play a extra substantial function in total market returns shifting ahead. In view of this, we are going to check out a few of the finest dividend shares in line with hedge funds.
For this text, we scanned Insider Monkey’s database of over 1,000 hedge funds and recognized the highest 10 firms that pay common dividends to shareholders and have dividend yields of no less than 1%, as of February 25. This implies the shares talked about on this checklist are the most well-liked dividend shares among the many elite hedge funds in America. The checklist is ranked in ascending order of the variety of hedge funds having stakes within the firms.
Why are we within the shares that hedge funds pile into? The reason being easy: our analysis has proven that we will outperform the market by imitating the highest inventory picks of the perfect hedge funds. Our quarterly publication’s technique selects 14 small-cap and large-cap shares each quarter and has returned 373.4% since Might 2014, beating its benchmark by 218 share factors (see more details here).
Is Johnson & Johnson (JNJ) the Finest Retirement Inventory to Purchase In response to Hedge Funds?
A smiling child with an array of child care merchandise within the foreground.
Variety of Hedge Fund Holders: 98
An American multinational pharmaceutical firm, Johnson & Johnson (NYSE:JNJ) ranks eighth on our checklist of the perfect dividend shares in line with hedge funds. The corporate has a various portfolio that features over 10 high-performing medication throughout a number of therapeutic areas, reminiscent of infectious ailments and oncology. Along with its pharmaceutical enterprise, the corporate is a significant participant within the medical system business, offering additional diversification. Its monetary efficiency stays steady and dependable. Because the begin of 2025, the inventory has surged by almost 15%.
Within the fourth quarter of 2024, Johnson & Johnson (NYSE:JNJ) reported $22.5 billion in income, marking a 5.2% enhance from the prior 12 months. As a distinguished healthcare firm, it stays centered on creating remedies for ailments with substantial unmet wants, together with a number of myeloma, lung most cancers, inflammatory bowel illness, and coronary heart failure. The MedTech division recorded a 6.2% rise in world operational gross sales, with acquisitions and divestitures contributing 1.5% to this development. Sturdy demand for electrophysiology merchandise and Abiomed supported development within the Cardiovascular phase, whereas the Normal Surgical procedure unit noticed elevated gross sales of wound closure merchandise.
Johnson & Johnson (NYSE:JNJ)’s quarterly dividend at present is available in at $1.24 per share and has a dividend yield of three.00%, as of February 25. The corporate maintains one of many longest dividend development streaks out there, spanning 62 years.
General JNJ ranks eighth on our checklist of the dividend shares in line with hedge funds. Whereas we acknowledge the potential for JNJ as an funding, our conviction lies within the perception that some AI shares maintain higher promise for delivering greater returns and doing so inside a shorter timeframe. In case you are on the lookout for an AI inventory that’s extra promising than JNJ however that trades at lower than 5 occasions its earnings, take a look at our report concerning the cheapest AI stock.
