Covered, compounding reliability. A 2.0% yield on a 49.7% adjusted payout is covered income, not a stretch: $1.34 a quarter, raised in April 2026 for the 64th consecutive year. The growth is slow — 3.1% on the last raise — but it has run through recessions, and the payout still leaves about half of adjusted earnings behind it.
Key risk: Talc litigation — Q3 2026 took roughly $7 billion in special items, including the proposed talc resolution, cutting reported EPS to $0.09 for the quarter. If litigation charges stop being one-offs, they stop being excludable from the coverage story.
Changes if: Litigation or deal charges recur at a scale that pushes the payout well past 49.7% of adjusted earnings or eats the free cash flow behind it. On the adjusted basis the dividend is covered today; repeated reported-basis hits would change that read.
- ✓Payout-coverage check: 49.7% on an adjusted basis — $5.36 indicated against $10.79 of FY2025 adjusted diluted EPS (reported FY2025 EPS was $11.03). Covered, with about half of adjusted earnings retained.
- ✓Yield check: 2.0% indicated — $1.34/qtr × 4 at the $263.81 close on Oct. 23, 2026. Real, earned yield for a single stock, not a special or a return of capital.
- ✓Dividend growth check: 64 consecutive years of increases; the latest raise, declared Apr. 14, 2026, lifted the quarterly dividend 3.1%, from $1.30 to $1.34. Slow growth, uninterrupted.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.