
Should You Forget Johnson & Johnson and Buy This Magnificent High-Yield Dividend Stock Instead?
Key Takeaways
Johnson & Johnson (JNJ -0. 53%) is a storied company that has an incredible track record of returning value to investors over time via dividend increases. And the yield is attractive today...
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4 min read
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real estate
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July 7, 2025
06:07 AM
The Motley Fool
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Johnson & Johnson (JNJ -0. 53%) is a storied company that has an incredible track record of returning value to investors over time via dividend increases
And the yield is attractive today at 3
But if you are a dividend investor looking to maximize the income your portfolio generates, there could be a more attractive option out there for you yielding more than twice as much as J&J
There's a lot to Johnson & Johnson The first thing to make is that Johnson & Johnson is a very well-run company
And it offers a lot of positives for dividend investors
For example, the 3. 4% dividend yield on offer from this healthcare giant is well above the roughly 1. 3% you would get from an S&P 500 index (^GSPC -0
And it is also well above the nearly 1. 8% yield you would get from the average healthcare stock
Image source: Getty Images
In addition to the lofty yield, J&J's dividend has been increased annually for more than six decades
That's an incredible streak which speaks to a company that has a strong model that is being executed well in both good times and bad
You don't achieve Dividend King by accident
The one big negative right now is a legal issue around talcum powder that J&J sold
For some investors, the uncertainty around this legal issue might put them off, but that uncertainty is also what has helped lead to the high yield
It would be hard to suggest that buying J&J would be a huge mistake
But what if your main goal was to maximize the income your portfolio generates
In that case, you might want to examine Universal Health Realty Income Trust (UHT -0. 65%) and its lofty 7. 4% dividend yield
Universal Health Realty Income Trust is basically a bespoke REIT For starters, Universal Health Realty Income Trust is a real estate investment trust (REIT), which is different from J&J, which makes pharmaceutical and medical devices
But the perties the REIT owns are healthcare perties, so they do fall into the same general space
And given that its yield is more than twice as large as J&J's yield, it might be worth a closer look
One key factor here is that Universal Health Realty Income Trust has increased its dividend annually for four decades
While that isn't enough to make it a Dividend King, J&J, it is a very impressive dividend record
The dividend was creased again in June 2025
That's backed by a portfolio of around 75 perties spread across various U
The perties Universal Health Realty Income Trust owns are largely medical offices, but it also owns acute care hospitals and behavioral care centers, among other things
That said, the REIT is run by its largest tenant, Universal Health Services (UHS -1
That relationship does insert some management risks, but given the long string of dividend increases it appears that income investors have been well rewarded over time
And given the high dividend yield, it might be well worth taking on this management risk
That said, there is one notable issue that investors need to keep in mind
The lofty yield here will ly make up the lion's of total return over time
This is highlighted by the fact that Universal Health Realty Income Trust's dividend growth rate over the past decade has averaged around 1
That compares to J&J's dividend growth rate over the same time of roughly 5% a year
What are you looking for in a dividend stock
Buying Universal Health Realty Income Trust is yield, not growth
Investors need to make sure they understand that fact very ly when they compare it to Johnson & Johnson, which offers a much lower yield combined with much better growth spects
However, if you are retired and looking to maximize the income you are generating from your portfolio right now, switching from J&J to Universal Health Realty Income Trust could more than double your dividend income
That might be worth the switch for a lot of investors
Reuben Gregg Brewer has no position in any of the stocks mentioned
The Motley Fool recommends Johnson & Johnson
The Motley Fool has a disclosure policy.
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