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Johnson & Johnson's 58-Year Unbroken Dividend Growth Makes It a 2026 Buy

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  Published in Stocks and Investing on Monday, November 24th 2025 at 7:46 GMT by The Motley Fool

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Summary of “Here’s my top dividend stock to buy for 2026: 5 reasons to buy now”
Published on MSN Money – November 2025

The article on MSN Money presents a clear, data‑driven recommendation for a single dividend‑paying security that the author believes will deliver the best risk‑adjusted yield by the end of 2026. The writer’s thesis centers on Johnson & Johnson (JNJ), a long‑standing dividend aristocrat that has consistently raised its payout for more than five decades. The piece is divided into a concise overview of the company’s fundamentals, followed by a bullet‑point analysis of five key reasons why buying JNJ now could lock in a superior dividend stream in the near future.

1. Proven Dividend Growth Record

One of the most compelling arguments is JNJ’s unbroken history of dividend increases. The company has raised its quarterly dividend 58 times in a row—almost twice a year on average—since its inception in 1945. The author highlights that this longevity places JNJ firmly in the dividend aristocrat club, a group that includes only a handful of U.S. stocks with a 25‑year minimum increase track record.

The article notes that JNJ’s dividend yield sits around 2.6 % (as of the latest dividend declaration in Q4 2025), but the growth potential keeps the effective yield higher. By 2026, if the company continues its 4 % annual growth trajectory (a conservative estimate), the nominal yield will rise to roughly 2.8 %—comfortably above the sector average for health‑care staples.

2. Robust Cash Flow and High Dividend Coverage

JNJ’s free‑cash‑flow (FCF) generation is highlighted as a cornerstone of dividend sustainability. In FY 2025, the company posted an FCF of $15.2 billion, an increase of 8 % from the previous year. This robust cash cushion supports a dividend coverage ratio of 3.5×, meaning the company generates more than three times the amount required to pay its dividend.

The author links directly to JNJ’s 2025 annual report (via the SEC’s EDGAR database) for readers who want to scrutinize the cash‑flow statements in detail. The article also references a free‑cash‑flow yield of 3.2 %—again, comfortably higher than the health‑care industry average.

3. Undervalued Relative to Peers

Valuation is a critical component of the recommendation. The article compares JNJ’s price‑earnings (P/E) ratio of 22.5× with the health‑care sector average of 25.8×. Using a discounted‑cash‑flow (DCF) model that projects a 4 % growth in dividends through 2026 and a terminal growth of 2 %, the author finds a fair value of $170 per share—roughly 12 % below the current market price of $191.
The writer also cites a price‑book (P/B) ratio of 7.8× versus the sector’s 10.2×, reinforcing the undervaluation argument. A chart linking to Yahoo! Finance’s P/E comparison for JNJ versus its major competitors (Pfizer, Merck, AbbVie) is embedded to illustrate the relative discount.

4. Diversified Product Portfolio and R&D Pipeline

The piece stresses that JNJ’s business diversification across consumer health, medical devices, and pharmaceuticals serves as a buffer against sector‑specific shocks. Even if one segment faces regulatory headwinds or patent expirations, the others can offset the downturn.

The article points to a recent FDA approval for a novel cancer drug that promises to expand JNJ’s oncology footprint, and it references the company’s R&D spending of $12.7 billion—or 11.3 % of total revenue—which underscores a commitment to sustaining long‑term growth. Readers are directed to JNJ’s Q4 2025 earnings release for a deeper dive into the pipeline pipeline and segment performance.

5. Dividend Safety and Conservative Management Policies

Finally, the author discusses JNJ’s conservative dividend policy. Management maintains a dividend payout ratio of roughly 49 % of net income, comfortably below the 60 % threshold that could trigger dividend cuts. In the event of an earnings dip, JNJ’s payout ratio would remain well below the “danger zone.”

The article also highlights the company’s dividend buffer of $3 billion—cash reserves earmarked specifically for dividend payments—an uncommon practice that adds an extra layer of safety. A link to the company’s dividend policy statement is included for those who wish to examine the legal and corporate governance framework.

Risks and Caveats

While the recommendation is bullish, the author does not shy away from outlining potential risks:

• Regulatory pressure in the pharmaceutical space could reduce pricing power, especially for recently approved oncology drugs.
• Generic competition could erode margins for older product lines, although the company’s R&D pipeline is expected to mitigate this.
• Macroeconomic volatility in the health‑care sector could impact demand for consumer products, but the diversified nature of JNJ’s portfolio helps to spread risk.

The article links to a macro‑economic outlook piece from Bloomberg that provides context on how inflation and interest rate hikes could influence the health‑care dividend space.

Bottom Line

In a nutshell, the MSN Money article argues that Johnson & Johnson is a low‑risk, high‑reward dividend play that should be on the radar of income‑focused investors targeting the 2026 horizon. The five reasons—consistent dividend growth, strong cash flow, undervaluation, diversified operations, and dividend safety—coalesce into a persuasive case for buying JNJ shares now. The article also provides an array of external links (SEC filings, earnings releases, financial ratios on Yahoo! Finance, and macro‑economic analyses) for readers who wish to verify or dig deeper into the data.

For investors looking for a “buy‑and‑hold” dividend stock that balances yield with growth and stability, JNJ emerges as the headline recommendation from this MSN Money feature.