Is Johnson & Johnson (JNJ) the Best Dividend Paying Stock According to Hedge Funds?

We recently published a list of the 11 Best Dividend Paying Stocks According to Hedge Funds. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against other best dividend-paying stocks.

Dividend-paying stocks have consistently attracted investor interest due to their long-term value. CNBC highlights this by examining the historical performance of the broader market. Between 1960 and 2024, a $10,000 investment in the index would have grown to over $982,000 purely from stock price appreciation, based on data from FactSet and NYU Stern. However, many companies in the index also returned capital to shareholders through dividends. Had an investor reinvested those dividends over the years, the investment would have ballooned to approximately $6.42 million by the beginning of 2025.

This outlook seems reasonable, especially when considering how crucial cash flow has become in today’s economic environment. Investors continue to favor income-generating assets, and dividends remain one of the most reliable ways to deliver that income. Reflecting this trend, several companies within the market have recently introduced dividend payments.

According to S&P Global, companies in the S&P index now contribute roughly 85% of the total dividends paid across the market—up from 82% in 2024. This increase includes 2.7% of the total dividend pool coming from firms that only recently began issuing dividends. The top 29 companies in the index alone are responsible for 40% of all dividends paid by the index’s constituents and 35% of the total dividends across the entire US equity market. Under the current base-case forecast, these leading firms are expected to distribute a combined $280 billion in dividends. In a more optimistic (upside) scenario, that figure could climb by 2.75% to $288 billion, with major large cap companies projected to deliver the most significant gains by weighted average. If the most favorable (bull-case) conditions materialize, these 29 companies could boost total dividend payouts by an estimated 4.5%, contributing an additional 1% themselves.

It’s no surprise, then, that dividends have become a central theme in many investors’ strategies. According to Brian Bollinger, founder of Simply Safe Dividends, focusing on companies that regularly pay dividends can offer a sense of reassurance. He further noted that younger investors, in particular, have the opportunity to build long-term dividend growth portfolios aimed at maximizing total return and capital appreciation over time.

According to Nuveen, companies that focus on dividend growth tend to possess strong long-term fundamentals and may deliver relatively attractive performance in the year ahead. Historically, firms that consistently increased or initiated dividend payments have produced higher annualized returns and exhibited lower volatility compared to the broader equity market. While such companies may not lead in every market environment, their favorable risk-adjusted returns over extended periods make them a solid foundation for equity portfolios.

Nuveen also suggested that many firms remain in a strong position to continue raising dividends over time. In the US, corporate balance sheets are generally healthy, consumer spending remains steady, and earnings growth is projected to pick up pace in 2025. Data from FactSet shows that dividends per share for the S&P index rose by 7.6% in 2024, with consensus forecasts pointing to a further 4.2% increase in 2025. Given this, we will take a look at some of the best dividend stocks to buy according to hedge funds.

Our Methodology:

For this list, we scanned Insider Monkey’s database of over 1,000 hedge funds, as of the close of Q4 2024. From the top 60 companies, we selected 11 dividend stocks with yields of at least 1% as of April 12. These companies show strong financial performance and have solid records of paying dividends. The stocks are ranked according to the number of hedge funds having stakes in them.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 98

Johnson & Johnson (NYSE:JNJ) is a New Jersey-based healthcare company that specializes in manufacturing, developing, and selling a wide range of healthcare products and also offers related services. The company’s core pharmaceutical business remains unaffected by current tariffs for now, but its latest attempt to resolve talc-related lawsuits through bankruptcy was rejected by a judge. The company now plans to defend itself through the tort system, as courts have ruled the lawsuits don’t pose financial distress.

While it would have been ideal to resolve its legal challenges, Johnson & Johnson (NYSE:JNJ) continues to demonstrate exceptional financial strength and operational stability. Its pharmaceutical and MedTech divisions remain robust, supported by consistent earnings and a strong pipeline that regularly delivers new product approvals. With over a century of innovation behind it, the company is expected to maintain its momentum. The stock has surged by over 5% since the start of 2025, outperforming the broader market.

In Q4 2024, Johnson & Johnson (NYSE:JNJ) reported $22.5 billion in revenue, reflecting a 5.2% year-over-year increase and surpassing expectations by $84.4 million. Operational growth reached 6.7%, while the MedTech segment posted a 6.2% rise in global operational sales, aided by acquisitions and divestitures.

Johnson & Johnson (NYSE:JNJ) also maintains a 62-year streak of dividend growth, which makes it one of the best dividend-paying stocks on our list. It currently pays a quarterly dividend of $1.24 per share and has a dividend yield of 3.27%, as of April 12.

Overall, JNJ ranks 8th on our list of the best dividend paying stocks according to hedge funds. While we acknowledge the potential of JNJ as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than JNJ but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.

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Disclosure: None. This article is originally published at Insider Monkey.