Johnson & Johnson has been able to deliver consistent business growth without stretching (or overleveraging) its balance sheet. Many of the reasons for Johnson & Johnson's stellar credit rating can be found by looking at the company's balance sheet. Johnson & Johnson's competitive advantages come from its strong brand, massive economies of scale, and robust research and development spending.Įxamining Johnson & Johnson's Balance Sheet However, the company's growth prospects remain strong. As the domestic currency strengthens in value, the company's international revenues become less valuable when swapped back to USD. Source: Johnson & Johnson Fourth Quarter Earnings Presentation, slide 31Īs a globalized company, Johnson & Johnson is suffering from the continued strength of the U.S.
The ratings agency cited concerns about low oil prices, which led to deteriorating cash flow and rising leverage for the oil and gas supermajor.
Johnson & Johnson and Microsoft became the last two companies to hold the AAA credit rating when Exxon Mobil ( XOM) was downgraded to AA+ on April 26, 2016. This trend can be seen in the following diagram. The number has slowly trickled down over time. In the past, there were many more AAA-rated companies in the United States. Think about that for a second… Rating agencies have more faith in Johnson & Johnson to pay its debt than the United States government - and the government has the ability to tax.
Moreover, the United States Federal Government has a credit rating of AA+ from S&P, which indicates that the ratings agency has more faith in Johnson & Johnson's ability to repay debt than they do in the domestic government. Note that there are only 15 states with a AAA credit rating. The following diagram displays the credit ratings of the 50 American states and how they have changed over time. Before diving into Johnson & Johnson's company-specific credit factors, I wanted to provide a baseline. This post will discuss the many reasons why Johnson & Johnson holds a perfect credit score from S&P.įor investors that aren't familiar with S&P's credit ratings, it can be hard to appreciate just how rare Johnson & Johnson's perfect credit score is.
#Back in focus jnj full#
You can see the full list of all 51 Dividend Aristocrats here. Johnson & Johnson is also a Dividend Aristocrat, an elite group of companies with 25+ years of consecutive dividend increases. In fact, Johnson & Johnson is one of the most popular dividend growth stocks among dividend growth bloggers. The company has delivered strong shareholder returns over the years, driven by steadily increasing dividend payments. This stellar credit rating is a testament to the strength and stability of Johnson & Johnson's business model. Johnson & Johnson ( NYSE: JNJ) is one of only two companies to hold the coveted AAA credit rating from Standard & Poor's. This post was written by Nicholas McCullum on March 6, 2017, for Sure Dividend.
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