Portfolio Update
The FiveTwenty portfolio received $16.38 in dividends in the past week. GD paid their quaterly dividend during the week.
| Past Week Dividend | $16.38 |
| Current Quarter Dividend (Q1 2023) | $542.57 |
| LifeTime Dividend | $8,651.01 |
| Estimated Annual Dividend | $8,184.81 |
The capital allocation for the week of 02/12/2023 to 02/18/2023 will be used to add to our position in Johnson & Johnson (NYSE: JNJ).
Decrease in Estimated Annual Dividend
For the second time since the inception of the FiveTwenty portfolio the Estimated Annual Dividend decreased from the previous week. (Other instance) The decline was brought about by VFC reducing their quarterly dividend payout by 41% to $0.30 per share.
What does this mean for our position in VFC? The dividend reduction brings VFC’s forward yield down to about 4.57% based on a share price of $26.27 at close on 2/10/2023. The payout ratio based on estimated earnings for the next 4 quarters would be around 57%. Because VFC did not eliminate its dividend payout completely and we don’t believe that we can find another investment matching the yield without taking on additional risk, we will continue to hold on to our shares in VFC. We will keep close eye on developments for VFC and look for an opportunity to adjust our exposure to the company.
JNJ – Position Update
Since our last check-in on JNJ in week 6 of 2023, there have been no significant new developments. The share price declined 1.5% from $164.61 to $162.15 during that period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 60 years | 60 years | |
| Yield | 2.74% | 2.70% | 2.64% |
| Payout Ratio | 43.80%1 | 43.80%1 | |
| P/E | 16.201 | 16.551 |
1 computed using TTM adjusted EPS of $10.15 as of Q4 2022
FY 2022 earnings report
Did JNJ’s latest earnings report raise any warning flags?
We discussed JNJ’s FY 2022 earnings report in our previous update. Overall, revenues grew 1.3%, adjusted earnings increased 3.2%, and adjusted EPS were 3.6% higher than in the year ago period.
| Revenue (in millions) | Net Income (in millions) | EPS . | |
| 2021 | $93,775 | $26,195 | $9.80 |
| 2022 | $94,943 | $27,038 | $10.15 |
| % Change | 1.3% | 3.2% | 3.6% |
Additional noteworthy developments during the quarter:
- See previous update.
Thesis
Why are we adding to our position in JNJ?
The basis of our investment thesis for JNJ remains the same. We are using this weeks capital allocation to build our position in this dividend aristocrat ahead of the upcoming ex-dividend date of 02/17/2023.
Previous Articles
- 2023 Week 6: Johnson & Johnson (NYSE: JNJ)
- 2022 Week 33: Johnson & Johnson (NYSE: JNJ)
- 2022 Week 32: Johnson & Johnson (NYSE: JNJ)
- 2021 Week 17: Johnson & Johnson (NYSE: JNJ)
- 2021 Week 14: Johnson & Johnson (NYSE: JNJ)
Photo by Fé Ngô on Unsplash
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