Here's My Pick for the Smartest High-Yield Dividend Stock to Buy Right Now
Key Points
Kenvue saw revenue and EPS rise in the second quarter.
The company was spun off from J&J three years ago.
Kimberly-Clark, its buyout suitor, is also a Dividend King.
- 10 stocks we like better than Kenvue ›
Kenvue (NYSE: KVUE) is often overlooked when investors think about the best healthcare dividend stocks. The company was only spun off from Johnson & Johnson three years ago, but counting its time as the consumer healthcare division with the parent company, it has increased its dividend for 64 consecutive years. That makes it a Dividend King, one of the few companies that have increased their dividends for 50 or more consecutive years.
It's not just longevity that makes Kenvue a good dividend stock, though. Its dividend yield at its current share price is 4.68%, more than four times the average S&P 500 dividend yield and nearly twice the dividend yield of the average Dividend King.
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Kenvue isn't a growth stock, but its stable of non-discretionary, recession-resilient brands, including Tylenol, Motrin, Listerine, Band-Aid, Neutrogena, and Zyrtec, generate sticky, steady consumer demand regardless of macroeconomic cycles. In the second quarter, it reported revenue of $3.95 billion, up 3%, year over year, and earnings per share (EPS) of $0.24, up 9% over the same period a year ago.
The one concern, though, is that Kenvue is being acquired by personal care product maker Kimberly-Clark (NASDAQ: KMB). In one sense, if regulators approve the deal, it will create uncertainty about Kenvue's dividend, as Kimberly-Clark will absorb the company. At the same time, Kimberly-Clark is also a Dividend King with 54 consecutive years of dividend increases, and its yield is even higher at around 5.23%.
The move makes sense for Kimberly-Clark, as uniting the two companies should allow for greater scale and cost savings. With both companies showing a strong commitment to their dividend, buying Kenvue for the dividend makes sense whether the deal is approved or not.
Should you buy stock in Kenvue right now?
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James Halley has positions in Johnson & Johnson. The Motley Fool recommends Johnson & Johnson and Kenvue. The Motley Fool has a disclosure policy.
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