USA – Johnson & Johnson has announced a share repurchase program to buy back up to US$5 billion of the company’s common stock.
J&J said the repurchase program announced has no time limit, and the company can opt to suspend it for periods or even discontinue it.
The company had roughly 2.6 billion common stock shares outstanding as of July 22. Company officials don’t expect it to incur debt to fund the share repurchase.
In addition, Johnson & Johnson reaffirmed its full-year 2022 adjusted operational sales growth and earnings per share guidance of 6.5–7.5% and US$10.65–10.75 per share, respectively.
J&J’s cash flow is strong and its debt levels are manageable, enabling it to return some money to shareholders in the form of share repurchases while growing dividends and investing in innovation at the same time.
“With our strong cash flow and lowest level of net debt in five years, we have the ability to invest in innovation, grow our dividend, execute strategic acquisitions, and take this action to deliver shareholder returns and drive long-term growth,” CEO Joaquin Duato said.
Along with the buyback announcement, J&J maintained its previously issued financial guidance for 2022. J&J expects to generate revenues in the range of US$93.3 billion to US$94.3 billion. This guidance excludes any revenues from J&J’s COVID-19 vaccine.
J&J has been consistently returning value to shareholders through share buybacks and dividend payments, which have been hiked for 60 consecutive years.
In July, the board announced a 6.6% increase in the quarterly dividend, from US$1.06 per share to US$1.13 per share.
This adds up to an annual dividend of US$4.52 per share compared with the previous rate of US$4.24 per share.
The US$5 billion stock repurchase comes as J&J faces scrutiny over a complex maneuver nicknamed the “Texas two-step.”
Critics allege that J&J is seeking to shield itself from billions of dollars worth of lawsuit payouts involving people who claim J&J’s talc-based baby powder caused them to develop cancer.
J&J also plans to spin off its consumer business in 2023. 3M is trying a similar strategy to shield itself from lawsuits over potential faulty earplugs sold to the military.
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