Is the Dip in Johnson & Johnson Shares Offering a Buying Opportunity?

Johnson & Johnson shares

Johnson & Johnson shares tumbled more than 17% since it hit the all-time high of $148 a share at the beginning of the year.

Johnson & Johnson shares
Source: finviz

Its share price has been under pressure over the last couple of months amid the trade war tensions between the United States, the European Union, and China. Johnson & Johnson has extensive market penetration in Chinese markets; traders believe that the threat of the trade war could have a huge impact on its sales performance. The significant sell-off in the Dow Jones Index also contributed to the drop in the JNJ stock.

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JNJ Stock (NYSE:JNJ): Dip in Johnson & Johnson Shares a Buying Opportunity?

Besides pressure from the trade war tensions, Johnson & Johnson appears to be in a stable position to support its share price. Its first-quarter revenue of $20 billion jumped 12% since the same period last year. The company generated steady growth across all business segments: Pharmaceutical, $9,844M (+19.4%); Consumer, $3,398M (+5.3%);  and Medical Devices, $6,767M (+7.5%).

Johnson & Johnson expects to invest significantly in its businesses and product innovation in order to sustain the momentum. It is planning to spend $30 billion on growth opportunities in the following four years.

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JNJ’s earnings per share rose 12.9% year over year in the first quarter, thanks to its potential to convert revenue growth into big profits. Johnson & Johnson anticipates its full-year sales to stand in the range of $81 billion this year, which would be sharply higher than $76.4 billion in past year.

Dividend Growth is Safe

Johnson & Johnson shares
Source: zacks

Johnson & Johnson has increased its dividends over the last 56 consecutive years. It has recently increased the quarterly dividend by 7% for this year. JNJ’s dividends are safe, considering its robust cash generation potential; its free cash flow of $2.9 billion sufficiently covered the dividend payments of $2.6 billion in the first quarter. The company expects its earnings to stand in the range of $8.20 per share this year, compared to the annual dividend of $3.6 per share.

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