"My dividend keeps going up every year, which in turn reduces my cost basis..."
I think I know what you're trying to say, but what you wrote literally is incorrect. Assuming you own JNJ in a taxable account, you pay taxes on your dividends. Yes, all else equal, JNJ's share price is adjusted/lowered the amount of the div so that when you sell you're not double taxed. You can say that the dividends you receive from JNJ help pay you back for your original purchase cost, but you should not reduce your cost basis the amount of your dividend payment. If you did so, you'd have a higher taxable gain (hopefully a gain) and be taxed more than you should be! Of course, if someone reinvests their JNJ divs, they should ADD the div payment to their cost basis...same goes with mutual funds and from what I have read, apparently alot of people forget to add the cost of the shares they received/bought from reinvesting the fund's distributions and as a result, they pay more capital gains tax when they sell than their acutal liability.