Is This Dividend King Stock a Buy After Major News?

Although overall stock markets did well in 2025, there was considerable fluctuation, particularly at the beginning of the year, partly because of the Trump administration’s trade policies. The president implemented high tariffs on a wide range of goods, which many worried would negatively impact corporate earnings. The situation regarding these tariffs is still developing, and numerous companies are seeking strategies to address this possible challenge. That leads us toJohnson & Johnson (NYSE: JNJ)a leading pharmaceutical company that has recently been in the news. Let’s examine what these recent changes signify for Johnson & Johnson and whether the stock is a good investment.

Avoiding the impact of tariffs

On January 8, Johnson & Johnson revealed that it had finalized an agreement with the Trump administration to provide medications at lower costs within the nation. As part of the arrangement, thehealthcare giant will be exempt from tariffsIndeed, it’s not perfect that Johnson & Johnson is lowering the prices of certain medications, but this move might result in higher sales volume, which could partially compensate for the lower pricing.

Additionally, a tariff exemption might enable the company to prevent increased expenses due to high import taxes. By the end of fiscal year 2024, Johnson & Johnson operated 64 manufacturing plants, 41 of which were located outside the United States. Therefore, tariffs could significantly affect its financial performance. Earlier last year, the company projected $400 million in tariff-related costs for fiscal year 2025, although this estimate was made prior to major changes and ongoing uncertainty.

That might not appear significant for a company that earns more than $14 billion in net income (as of 2024), but the effect of tariffs would accumulate over multiple years and, in the long run, significantly reduce its profits and margins. Therefore, selling medications at a reduced price in return for a tariff exemption is a beneficial strategy for the pharmaceutical company. Johnson & Johnson is also focusing on enhancing its manufacturing capabilities within the United States.

It’s worth noting that Johnson & Johnson is not the firstpharmaceutical leaderto reach a comparable agreement with the Trump administration. Others, specifically Pfizer and AstraZeneca, have taken comparable actions.

Should I purchase the stock?

Johnson & Johnson had a strong performance last year even with the tariff challenges and the loss of U.S. patent protection for one of its key products, Stelara, an immunosuppressant. In the third quarter, the company’s revenue rose by a steady 6.8% compared to the previous year, reaching $24 billion. Johnson & Johnson’s adjustedearnings per sharearrived at $2.8, reflecting an increase of 15.7% from the same period last year. One factor contributing to Johnson & Johnson’s solid results is its extensive and varied range of products.

Stelara served as a key growth contributor, but other products have since taken over that role. The company can still rely on medications like the cancer treatments Darzalex and Erleada, as well as the immunosuppressant Tremfya, among others. Additionally, Johnson & Johnson is even more diversified due to its medical technology division. That said, some may highlight the risks the company encounters, includingMedicarenegotiations over medication costs that could impact revenue for certain items.

Nevertheless, the creative abilities of Johnson & Johnson, which allow it to surmountpatent cliffs, can also help reduce this risk. The company maintains an extensive product pipeline with numerous candidates and consistently secures new approvals and label updates. Among its recent approvals are Imaavy, a treatment for generalized myasthenia gravis (an autoimmune condition causing muscle weakness); and Akeega for prostate cancer.

Johnson & Johnson is likely to remain stable despite the Medicare drug price negotiation. Additionally, the company is dealing with numerous lawsuits, but this should not pose a significant issue due to its strong financial position, as demonstrated byits AAA credit ratingJohnson & Johnson also has significant long-term advantages. One of these is the global aging population. Older individuals require more medical treatment, including prescription medications. Within its medical technology division, Johnson & Johnson is working on the Ottava system, which will allow it to enter the less saturated robotic surgery market.

Finally, Johnson & Johnson stands out as a remarkable income stock. The company is aDividend King, or a company that has consistently increased its dividends for at least 50 years. For these reasons, Johnson & Johnson is a solid long-term investment, particularly for those looking for steady income.

Prosper Junior Bakinyholds positions in Johnson & Johnson. The Motley Fool holds positions in and advises on AstraZeneca Plc and Pfizer. The Motley Fool recommends Johnson & Johnson. The Motley Fool has adisclosure policy.