The S&P 500 has more than doubled off its bottom, which was posted almost two years ago. Consequently, most stocks have become richly valued and thus many investors fear that there will be excessive downside risk whenever the next downturn shows up. The recent surge in inflation has only increased the anxiety of investors, as it may exert pressure on the valuation of stocks if it persists. In such tumultuous periods, investors should try to build a defensive portfolio, which will prove resilient even in a market crash. Johnson & Johnson (JNJ) is certainly an ideal Dividend King to hold in a market crash.

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Johnson & Johnson has an exceptional dividend growth record, with 59 consecutive years of dividend growth. It is a popular company mostly for its consumer products but these products generate only 17% of its total sales. The pharmaceutical segment is by far the most profitable segment of the company, as it generates approximately half of the total revenues and 75% of the earnings of the company. Medical devices generate 34% of total revenues.

Johnson & Johnson has 28 brands/pharmaceutical platforms that generate more than $1 billion in annual revenues. The company is a leader in its markets, as it generates approximately 70% of its sales from the Nr 1 or Nr 2 market share position.

Moreover, Johnson & Johnson is the fifth-largest company in the U.S. and the eighth-largest company in the world in the total amount spent on Research & Development (R&D). Thanks to its exemplary R&D department, the company has an impressive growth record. Johnson & Johnson grew its adjusted operational earnings for 36 consecutive years until 2020 when the pandemic caused a benign 7% decrease in its earnings per share.

A 7% decrease in the earnings per share during one of the fiercest downturns in history is a testament to the resilience of the pharmaceutical giant to recessions. Even better, the company has emerged stronger from this crisis.

In the most recent quarter, its pharmaceutical segment grew its revenue 14% over the prior year’s quarter, primarily thanks to strong demand for treatment in oncology as well as robust demand for the vaccine against the coronavirus. As a result, the company grew its total revenue 11% and its earnings per share 18%. It is thus expected to have grown its earnings per share 22% in 2021, from $8.03 in 2020 to a new all-time high of about $9.80.

Even better, Johnson & Johnson has never rested on its laurels. Thanks to its exemplary R&D department, its pharmaceutical segment has a promising pipeline, which is likely to keep the company in growth mode for many more years. Johnson & Johnson has grown its earnings per share at a 5.4% average annual rate over the last decade. Given its consistent performance record and its strong business momentum right now, we expect the company to grow its earnings per share by 6.0% per year on average over the next five years.

Moreover, Johnson & Johnson has raised its dividend for 59 consecutive years and is currently offering a 2.5% dividend yield. Given the solid payout ratio of 43% of the stock and its rock-solid balance sheet, investors should rest assured that the company will continue raising its dividend for many more years.

Based on expected earnings per share of $9.80 in 2021, Johnson & Johnson is trading for a price-to-earnings ratio of 17.7. This is slightly higher than our fair value estimate of 17.0 for this stock. If the stock trades at our fair valuation level in five years, it will incur a 0.8% annualized drag in its returns. Moreover, we expect annual growth of earnings per share of 6.0%, while the stock offers a 2.5% dividend yield. We thus expect Johnson & Johnson to offer a total average annual return of 7.5% over the next five years.

To sum up, Johnson & Johnson is likely to offer an attractive total return in the upcoming years. In addition, as it is one of the most resilient companies to recessions, it protects its shareholders from emotional pressure during bear markets and makes it easy for them to hold the stock for the long run.