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  • sjjpharm sjjpharm Apr 27, 2011 1:57 PM Flag

    Moody's on JNJ: Outlook Revised to Negative

    No one think there will not have a dividend boost. The question is how much - 10+% as the past norm or less than 10%.
    Since the increase has not been announced at the 1Q as before, this indicates the dividend increase will be less than 10%. We will know by tomorrow this time.

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    • I'll take the outlier: 50/50 it remains Unch.

      That said, the company cannot afford to increase cash disbursements by 10%, with such an enormous acquisition on the stove. Three cents, perhaps four, maximum. Corporations with the "coveted" AAA rating don't like seeing the words "negative outlook" mentioned with respect to their top-notch paper. This rating will be preserved at all costs -- literally, and figuratively.

      Dividend austerity: Version 2.011.

      • 2 Replies to doral1986
      • Well, it wasn't "Unch," but it may just as well have been: three cents.

        As stated, Synthes is a fiscal game changer for this company, and Moody's sent the first shot across Weldon's bow: "if you ant to retain Aaa, then shareholdes are going to have to pay for it."

        And we did. A mere 5% increase. JNJ is now officially what Peter Lynch referred to as a "stalwart:" mature, growth in-line with GDP, and small, incremental dividend increases -- scraps from Weldon's table, to keep the shareholder base happy.

        Several years ago, Barron's called Abbott Labs the Johnson & Johnson of forty years ago -- higher growth in both EPS and dividends. For once, Barron's may have had it right. It may be time to switch from one ( JNJ ) to the other.

      • Guarantee the dividend gets increased this week. If you read Dominic Caruso's statement the Dividend is JNJ's top priority. They have plenty of cash. As a result of this years positive cash flow of over $8B the cash portion of Synthes purchase will be will be recouped in less then a year. As you can see the Market has recognized this.

 
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