On May 4, 2023, Johnson & Johnson [JNJ] split off a significant portion of its consumer healthcare business, representing approximately 17% of its revenue. On July 20, 2023, this new company declared its first quarterly dividend of $0.20, reminding investors why it is a Dividend King. Whaaaat?!
Well, it turns out there are, if not rules per se, considerations that determine whether a parent company’s streak of paying and increasing dividends shall be passed onto or inherited by a newly created company in a divestiture. Those considerations take into account whether the new company was a significant component of the parent company, whether it will pay a dividend of its own, the size and yield of both dividends before and after the divesture, and who knows what else. But here’s the thing: you and I don’t decide. In this case, S&P Global Inc [SPGI], themselves a Dividend King, made the decision.
On August 22, 2023, S&P Global made the announcement that this newly formed company would be added to the S&P 500 Dividend Aristocrats Index. A company does not make it into this distinguished list unless they’ve increased their dividend for a minimum of 25 years. Further, because JNJ is a Dividend King with a 61-year increase streak, one can logically assume that this entire streak, and not some lesser streak between 25 and 61 years, is what has been inherited. And thus, Sure Dividend has concluded that this newly created company is in fact a Dividend King and I see no reason to argue.
All hail Kenvue Inc!
“We’ll Lead as Two Kings”
Did S&P Global have meetings to decide whether Kenvue Inc [KVUE] should inherit the streak of the father? And if so, would the father still be considered to have its streak? Was the term primogeniture uttered? Must not the King die for his first son to rule as King? Can we have two kings? I’d like to think these questions were at the heart and lips of those gathered into S&P Global’s largest conference room, well into the night.
To my knowledge, this has happened just twice before, once when Tenacious D decided to lead as two kings after the riots, and when AbbVie Inc [ABBV] was spun-off from Abbott Laboratories [ABT] about a decade ago – then both being coronated some years later.
As we all remember from our very first grade school lessons, before primogeniture became the law and tradition of how monarchy succession was determined, kings would often choose their eldest son as successor before they died. There would be two kings, a coregency, if you will.
And so it is with JNJ and KVUE.
According to TD Ameritrade:
Kenvue Inc. is a consumer health company. The Company operates through three segments: Self Care, Skin Health and Beauty, and Essential Health. The Self Care segment product categories include cough, cold and allergy; pain care; and other self-care (digestive health, smoking cessation and other). The Skin Health and Beauty segment’s product categories include face and body care and hair, sun, and others. The Essential Health segment’s product categories include oral care, baby care and other essential health (women’s health and wound care). Its differentiated portfolio of brands includes Tylenol, Neutrogena, Listerine, Johnson’s, Band-Aid, Aveeno, Zyrtec, and Nicorette. It has a global footprint through which it sells and distributes its product portfolio in more than 165 countries across its four regions. Its network includes 114 distribution centers and 38 customer service centers across all its regions.
KVUE becomes the 15th Dividend King from the Consumer Staples sector. Here is the list of all the Kings in the Consumer Staples sector and the industry in which they conduct their business.
| Company | Ticker | Industry |
| Archer-Daniels-Midland Co | ADM | Food Products |
| Colgate-Palmolive Co | CL | Household Products |
| Hormel Foods Corp | HRL | Food Products |
| Kimberly-Clark Corp | KMB | Household Products |
| Coca-Cola Co | KO | Beverages |
| Kenvue Inc | KVUE | Personal Care Products |
| Lancaster Colony Corp | LANC | Food Products |
| Altria Group Inc | MO | Tobacco |
| PepsiCo Inc | PEP | Beverages |
| Procter & Gamble Co | PG | Household Products |
| Sysco Corp | SYY | Consumer Staples Distribution & Retail |
| Target Corp | TGT | Consumer Staples Distribution & Retail |
| Tootsie Roll Industries Inc | TR | Food Products |
| Universal Corp | UVV | Tobacco |
| Walmart Stores Inc | WMT | Consumer Staples Distribution & Retail |
Kenvue Inc may have an uninspiring name and boring logo, but at least they’re the only King in the Personal Care Products industry. Further, it is hard to argue that they don’t have a great portfolio of brands on which to continue paying growing dividends for the foreseeable future.
I’m wearing a Band-Aid right now and plan to take a Tylenol before this day is over.