JNJ Tops O as Top Retirement Holding for Long-Term Wealth

For retirees looking for income-generating assets, Realty Income (O) and Johnson & Johnson (JNJ) are two popular choices. However, a closer look at their financials reveals that JNJ is the better long-term holding due to its superior dividend durability and total return.

O pays a monthly dividend of $0.2715 per share with an annualized forward payout of $3.258 against a current share price of $58.82, resulting in a yield of 5.26%. On the other hand, JNJ pays quarterly dividends with a most recent payment of $1.34 per share and an annualized forward payout of $5.36 on a stock trading at $267.80, resulting in a yield of only 1.97%.

However, while O may offer higher monthly payouts, its financials are not as strong as JNJ's. O has a P/E ratio of 43 and carries net debt/EBITDA of 7.9x, with 65.7% of annualized base rent derived from non-investment-grade tenants.

JNJ, on the other hand, is a Dividend King with a 64-year streak of dividend increases, an AAA-rated balance sheet, and $21 billion in cash and marketable securities against full-year free cash flow approaching $21 billion. The company also has a diversified portfolio spanning 28 products and platforms, each generating more than $1 billion in annual revenue.

Looking at total return, JNJ has outpaced O with a year-to-date gain of 31.49% and a one-year gain of 54.35%. JNJ's beta is also lower at 0.235 compared to O's unknown beta.