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Johnson & Johnson Message Board

  • doral1986 doral1986 Apr 27, 2011 10:14 AM Flag

    Moody's on JNJ: Outlook Revised to Negative

    The current credit rating is as yet affirmed at Aaa, but the outlook for JNJ has been revised to "negative," by Moody's.

    The Synthes acquisition could possibly force JNJ to suspend scheduled further dividend increases, to satisfy debt covenants. In order to retain the Aaa and S&P AAA credit ratings, thus ensuring low costs for debt service, JNJ would gladly give it to shareholders once again, as if an entire decade of zero price appreciation was not bad enough.

    Dividend increase suspension is not unusual, as Kraft discontinued dividend increases in order to shore up cash flow for its Cadbury purchase. That was in 2008...they haven't raised it since.

    Three Bronx Cheers for Weldon:


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    • Agree. We will have dividend increase announced tomorrow. Thanks for the company's diversified business model the company has Billion $ positive cash flow every year even under the so so chairman Weldon. Also the current purchase will be paid partially with stock, so there is cash for the increase. However, the company may concern with the regular 10+% increase because the recent cut of employee bonus. So I bet this time the increase will be less than 10%. An disappointment for the long term holder.

    • what kind of weed are you smoking???? dividend increase is coming VERY soon.bank on it!

      • 1 Reply to robdon89
      • Rob, my man ! The historic announcement date for any dividend increase is usually concurrent with the Q1 earnings report.

        The silence is deafening.

        This is the largest acquisition in the company's history, and is a fiscal game-changer. Moody's has already put a shot across Weldon's bow with the "negative outlook" on JNJ paper. Translated: "Preservation of credit rating must supersede any increased cash disbursements to shareholders."

        It is 50/50 whether JNJ raises the dividend. To maintain his "legacy" AAA rating, Weldon will opt to short change shareholders in a literal sense.

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