Up to date on Could twenty first, 2024 by Bob Ciura
The Dividend Aristocrats include 68 firms within the S&P 500 Index which have raised their dividends for at the least 25 years in a row. Most of the firms have changed into large multi-national firms over the many years.
You possibly can see the total checklist of all 68 Dividend Aristocrats right here.
We created a full checklist of all Dividend Aristocrats, together with necessary monetary metrics like price-to-earnings ratios and dividend yields. You possibly can obtain your copy of the Dividend Aristocrats checklist by clicking on the hyperlink beneath:
Disclaimer: Positive Dividend isn’t affiliated with S&P World in any method. S&P World owns and maintains The Dividend Aristocrats Index. The knowledge on this article and downloadable spreadsheet is predicated on Positive Dividend’s personal overview, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s based mostly. Not one of the data on this article or spreadsheet is official information from S&P World. Seek the advice of S&P World for official data.
Kenvue Inc. (KVUE) is a current addition to the Dividend Aristocrats checklist, having been spun off from former mother or father firm Johnson & Johnson (JNJ) in 2023.
As a spin-off, Kenvue carries its former mother or father firm’s dividend development historical past, and is itself a Dividend Aristocrat.
This text will analyze Kenvue’s enterprise mannequin, future development catalysts, and anticipated returns.
Enterprise Overview
Kenvue operates within the healthcare sector as a shopper merchandise producer. In Could 2023, Kenvue was spun off from Johnson & Johnson. Now, Kenvue operates three segments: Self Care, Pores and skin Well being & Magnificence, and Important Well being.
Self Care’s product portfolio contains cough, chilly, allergy, smoking cessation, and ache care merchandise amongst others. Pores and skin Well being & Magnificence holds merchandise akin to face, physique, hair, and solar care.
Important Well being accommodates merchandise for ladies’s well being, wound care, oral care, and child care.
Effectively-known manufacturers in Kenvue’s product line up embody Tylenol, Listerine, Band-Support, Neutrogena, Nicorette, and Zyrtec.
Supply: Investor Presentation
On Could seventh, 2024, Kenvue reported first-quarter earnings outcomes. Income elevated 1.1% to $3.9 billion and was $110 million higher than anticipated. Adjusted earnings-per-share totaled $0.28, beating estimates by $0.03.
Natural gross sales grew 1.9% for the quarter. Pricing added 5.0% to gross sales development, partially offset by a 3.1% lower in quantity. Outcomes have been up towards a troublesome comparable interval the place retailer stock re-builds have been particularly robust.
Self Care and Important Well being, led by Oral Care, have been the most effective performing companies throughout the firm whereas Pores and skin Well being and Magnificence have been weaker for the interval.
Kenvue additionally reaffirmed prior steering for 2024. The corporate continues to anticipate income development to be in a spread of 1.0% to three.0% and adjusted earnings-per-share in a spread of $1.10 to $1.20 for the yr.
Progress Prospects
Previous to the spin-off, Johnson & Johnson produced annual earnings development of seven% for the 2013 to 2022 interval as the corporate’s diversification allowed it to be one of many extra steady firms available in the market place.
In the present day, Kenvue consists of simply the patron merchandise companies, which have been typically produced the bottom ranges of development.
For its half, Kenvue administration expects the corporate to generate natural income development round 3%-4% per yr. Due to this fact, we anticipate that Kenvue will develop earnings-per-share by 3% yearly by means of 2028.
Johnson & Johnson’s dividend development streak of 61 consecutive years is without doubt one of the longest available in the market place. Consequently, Kenvue is each a Dividend King and a Dividend Aristocrat.
We consider that penchant for dividend development is in Kenvue’s enterprise DNA.
Aggressive Benefits & Recession Efficiency
Kenvue’s former mother or father firm Johnson & Johnson has confirmed to be one of the vital profitable firms at navigating recessions.
Although Kenvue not advantages from its mother or father firm’s diversification, we consider that it will show equally efficient at dealing with financial downturns.
Since Kenvue was a subsidiary of Johnson & Johnson throughout the Nice Recession of 2008-2009, there isn’t any information on its earnings-per-share efficiency throughout that point.
Nevertheless, traders can moderately infer that Kenvue would show the same diploma of resilience throughout recessions as its former mother or father firm.
The corporate’s merchandise, akin to Band-Support and Tylenol, are wanted whatever the state of the economic system as they deal instantly with shoppers’ well being and well-being. As trusted merchandise, they want proceed to carry out nicely even below antagonistic circumstances.
General, Kenvue ought to proceed to boost its dividend for a lot of extra years because of its low payout ratio, its first rate resilience to recessions, and its wholesome stability sheet.
Valuation & Anticipated Returns
We anticipate Kenvue to generate adjusted earnings-per-share of $1.15 for 2024. Due to this fact, shares of Kenvue presently commerce for a price-to-earnings ratio of 17.4.
For context, Johnson & Johnson shares have a mean price-to-earnings ratio of near 19 since 2013.
Countering the truth that Kenvue holds a number of the trade main manufacturers with that its merchandise have been the decrease margin companies throughout the mother or father firm, we’ve got a goal price-to-earnings ratio of 14 for the inventory.
This suggests a future headwind from P/E a number of contraction.
Due to this fact, valuation might cut back annual returns by 4.3% if the inventory have been to achieve our goal a number of by 2028. Optimistic returns might be generated by EPS development (estimated at 3% per yr) and dividends.
On July twentieth, 2023, Kenvue introduced its first-ever quarterly dividend of $0.20 per share. The annualized payout of $0.80 per share represents a present yield of 4.0%.
Placing all of it collectively, whole returns are anticipated at 2.7% per yr by means of 2028.
Last Ideas
Kenvue is a comparatively new addition to the Dividend Aristocrats checklist. After many years as a part of Johnson & Johnson, Kenvue grew to become an unbiased entity in 2023.
Whereas we discover the legacy enterprise to be recession-resistant and the excessive dividend yield to be engaging for revenue traders, the overall return profile isn’t excessive sufficient for a purchase suggestion. We price KVUE inventory to be a promote attributable to valuation.
Moreover, the next Positive Dividend databases include essentially the most dependable dividend growers in our funding universe:
The Dividend Champions: Dividend shares with 25+ years of dividend will increase, together with these that will not qualify as Dividend Aristocrats.
The Finest DRIP Shares: The highest 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
When you’re searching for shares with distinctive dividend traits, contemplate the next Positive Dividend databases:
The key home inventory market indices are one other strong useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month:
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