Best Dividend Stock To Buy And Own For Life?!

Video Length: 00:10:53

Now, without further ado, the best dividend stock to buy and own, from our perspective, is Johnson and Johnson (JNJ). We consider them the most reliable dividend stock, from a dividend yield, valuation and dividend growth perspective. Owning Johnson and Johnson stock has been one of the best decisions we have made years ago and they continue to increase the passive income stream via dividends to us shareholders.

We also go into depth about why Johnson and Johnson is the best dividend stock to own.

First, Johnson and Johnson (JNJ) has increased their dividend for almost 60 consecutive years and they have done so at an average dividend growth rate of between 6% and 7%!

Not too many dividend stocks are in that company. In fact, they are considered a Dividend King (50+ years of dividend increases).

Buying stock in Johnson and Johnson, you know what you are going to get - a reliable and growing dividend income stream.

Second, Johnson and Johnson’s (JNJ) valuation has shown signs of undervaluation vs. the stock market. They currently trade at a price to earnings (P/E) ratio of 16x earnings. This ratio compares favorably to the S&P 500 Index, that currently trades over 28x earnings! Even if their share price has consistently risen over the years, JNJ still shows signs of undervaluation.

Third, Johnson and Johnson (JNJ) has the perfect dividend payout ratio. We consider the perfect dividend payout ratio to be between 40% and 60%. Why? This demonstrates that the business wants to reinvest a portion of their earnings to grow the company and also to send dividend payments, as a way to reward shareholders. It’s a perfectly balanced approach!

Lastly, Johnson and Johnson (JNJ) currently yield close to 3%, sitting at just under 2.80%. Again, this compares favorably, as it is a full 1% higher than the broader stock market, as well as is almost 5x the APY on your high yield savings account, which continues to decline throughout 2020. Do you own Johnson and Johnson stock? Are you considering buying this dividend stock? Would you agree that JNJ is the best dividend stock to buy and own out there?