Portfolio Update
The FiveTwenty portfolio received $180.49 dividends in the past week. BMY, GD, T and VZ paid their quarterly dividend during the week.
| Past Week Dividend | $180.49 |
| Current Quarter Dividend (Q3 2022) | $358.67 |
| LifeTime Dividend | $4,965.83 |
| Estimated Annual Dividend | $6,056.88 |
The capital allocation for the week of 08/07/2022 to 08/13/2022 will be used to add to our position in Johnson & Johnson (NYSE: JNJ)
JNJ – Position Update
Since our last check-in on JNJ in week 17 of 2021, the company FY 2021 financial results on 01/25/2022, Q1 2022 results on 04/19/2022, and Q2 2022 results on 07/19/2022. In addition, the share price increased 3.4% from $165.52 to $171.11.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 60 years | 59 years | |
| Yield | 2.52% | 2.47% | 2.66% |
| Payout Ratio | 43.14%1 | 49.15%2 | |
| P/E | 17.131 | 19.892 |
1 computed using TTM adjusted EPS of $9.99 as of Q2 2022
2 computed using TTM adjusted EPS of $8.32 as of Q1 2021
Q2 2022 earnings report
Did JNJ’s latest earnings report raise any warning flags?
JNJ posted a solid quarter for Q2 2022. Revenue, adjusted net income, and adjusted EPS increased compared to Q2 2022. With almost 50% of revenue for JNJ coming from outside the US, the Q2 2022 results were even more impressive given the currency headwinds provided by a strengthening US currency. It was also encouraging to see adjusted net income rise faster than revenue, and adjusted EPS increase at a higher rate than adjusted net income. Overall, revenues grew 3%, adjusted net income increased 4.3%, and adjusted EPS were 4.4% higher than Q2 2021.
| Revenue (in millions) | Adj. Net Income (in millions) | Adj. EPS . | |
| Q2 2021 | $23,312 | $6,625 | $2.48 |
| Q2 2022 | $24,020 | $6,912 | $2.59 |
| % Change | 3% | 4.3% | 4.4% |
Additional noteworthy developments during the quarter:
- On 07/18/2022, JNJ declared a quarterly dividend of $1.13 per share payable on 09/06/2022 to shareholders of record as of close of business on 08/23/2022.
- During the quarter, the company invested $3.7 billion in R&D and paid out $3.0 billion in dividends.
Looking ahead, JNJ lowered its guidance for full year 2022 reported revenue to a range of $93.3 to $94.3 billion, an increase of 2.1% to 3.1% compared to 2021, from previously guidance of $94.8 to $95.8 billion. The company also lowered guidance for adjusted EPS to a range of $10.00 to $10.10, an increase of 2.1% to 3.1% compared to 2021, from previous guidance of $10.15 to $10.35.
Thesis
Why are we adding to our position in JNJ?
Since our initial investment in JNJ, the company has continued to post steady and solid growth numbers. In FY 2021, JNJ grew revenue, adjusted net earnings, and adjusted EPS 13.6%, 22.2%, and 22% respectively. It has then continued to grow, albeit at a slower rate, in 2022 despite currency headwinds.
Furthermore, the company has continued to increase its dividend payout on a very predictable schedule. The company increased its dividend payout by 5% in FY 2021, and then again by 6.6% in FY 2022.
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