Better Dividend King to Buy and Hold: Johnson & Johnson or Kenvue?

Dividend investors looking for a defensive healthcare candidate will likely come across companies like Johnson & Johnson (NYSE: JNJ) and Kenvue (NYSE: KVUE), and the next natural question is which one deserves a permanent spot in a dividend portfolio.

Granted, one could compare dividend yields, payout ratios, and other related metrics and be done with all of it. But it's the company itself that deserves a deeper look, because other factors -- like acquisitions, legal settlements, and the company's growth trajectory -- can complicate matters.

So let's dive into which stock better deserves a spot in your portfolio.

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Johnson & Johnson: The more established contender

Johnson & Johnson is a popular company with dividend growth investors. It's a Dividend King, which means it has increased its dividend payouts for 50 or more consecutive years. In this particular case, 2026 marks the company's 64th consecutive annual dividend increase, raising payouts to $5.36 per share per year, which translates to a 2% forward yield.

Since spinning off its consumer health division (spoiler alert: it's Kenvue), J&J is now a pure-play pharmaceutical and medical technology business. It's now focusing on higher-growth, higher-margin, and higher-risk areas such as oncology, immunology, and surgical devices.

But how high-risk, exactly?

So far, litigation is one of the company's biggest concerns -- namely, the long-running claims that its talc-based baby powder caused ovarian cancer and mesothelioma. The ovarian cancer claims have a proposed $5.5 billion settlement pending a 95% participation threshold, while mesothelioma cases are still being litigated individually. J&J also had about $3.7 billion reserved for talc-related liabilities as of the second quarter of 2026.

So, the reliable dividend payer carries some serious legal baggage. Settlements could eat into the cash it would otherwise put toward dividends, research and development, or acquisitions.

Meanwhile, the stock trades at around a 31 price-to-earnings ratio, making it appear more expensive than the sector average of 25. However, a consensus among 25 analysts still rates the stock a "Moderate Buy," with a $320 high target price. Wall Street thinks there's still some upside left.

Kenvue faces uncertainty ahead of the Kimberly-Clark merger

Now, on to the J&J spinoff.

Kenvue typically appears as a Dividend King on many lists because, if we count its years as part of J&J, 64 years of consecutive increases passes the test. Right now, the company pays $0.84 per share per year, resulting in a much higher 4.71% forward yield. That said, the stock itself is also cheaper at about 21x earnings.

Unlike J&J, Wall Street analysts rate Kenvue a consensus "Hold," with a mean target price set at $19. Part of the tepid outlook stems from the business itself. The company owns mature, slow-growing consumer staple brands like Tylenol, Band-Aid, and Listerine. Sure, every household needs them, but once everyday demand matures, revenue growth starts to plateau.

The bigger reason for the mediocre rating today is that Kenvue may not exist as a stand-alone dividend stock for much longer. In November 2025, Kimberly-Clark agreed to acquire Kenvue in a cash-and-stock deal that valued Kenvue at around $48.7 billion. That changes the story, since buying Kenvue now means buying into the proposed acquisition early, creating uncertainty about the combined company's financials, business risks, and the dividend's future.

Johnson & Johnson wins as the better buy-and-hold pick

Owning Kenvue is more of a waiting game while the acquisition is completed and, by extension, a bet on Kimberly-Clark's dividend. On the other hand, J&J's dividend history speaks for itself, and despite having billions in legal liabilities on the books, the company still has the cash flow and a sufficiently diverse business model to continue increasing the dividend. So for true buy-and-hold dividend investors, J&J wins, at least for now.

Rick Orford has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson and Kenvue. The Motley Fool has a disclosure policy.