The Fed Is Poised to Shake Wall Street This Month: Here Is the 1 Dirt-Cheap Stock I’m Loading Up on Anyway

I keep buying Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) because the market keeps handing me a discount on a company that refuses to act like the slow, sleepy legacy name Wall Street wants to price it as. The Fed will say what it says this month. The headlines will do what headlines do. I am still hitting the buy button, and here is the honest reason why.

The thesis is simple. After spinning off Kenvue, J&J became a leaner, higher-margin business built around two engines: innovative medicine and medical technology. It funds operations and rewards shareholders from internal cash flow, independent of central bank policy. When Fed-driven panic puts a compounding machine on sale, I show up with a shopping cart.

The first piece of evidence is the cash return. The board raised the quarterly payout 3.1% to $1.34 per share, extending 64 consecutive years of dividend growth. The yield sits at 2.24% and is backed by $19.7 billion in 2025 free cash flow and one of only two AAA-rated balance sheets in corporate America. That combination is rare, and it is exactly what I want anchoring the income side of a long-horizon portfolio.

The second piece of evidence is operating performance that does not match the “stagnant legacy pharma” caricature. Q1 2026 revenue came in at $24.06 billion, up 9.9% year over year, with adjusted EPS of $2.70, the fourth consecutive consensus beat. Innovative Medicine grew 11.2%, MedTech 7.7%. DARZALEX did $3.96 billion (+22.5%), TREMFYA $1.61 billion (+68.3%), and CARVYKTI $597 million (+62.1%). Management then raised full-year guidance to $100.30 billion to $101.30 billion in revenue and $11.45 to $11.65 in adjusted EPS, telling investors they are “solidifying its path to double-digit growth by the end of the decade.”

The third piece is valuation. At $238.49, JNJ trades at a forward earnings multiple of roughly 20 on a business compounding earnings, raising guidance four quarters in a row, and protecting a fortress balance sheet. Yes, the stock is up 16.52% year to date versus the S&P 500 at 6.38%, and I still find it cheap relative to the pipeline behind it.

Now the honest risk. STELARA is being eaten alive by biosimilars. Q1 sales dropped to $656 million, a 59.7% decline, a roughly 920 basis point drag on Innovative Medicine. Layer in ongoing talc litigation, including a $330 million charge in Q1 2026, and the bear case writes itself. Here is why it has not moved me: TREMFYA alone is capturing the share STELARA loses, and the segment still grew double digits through the erosion. The litigation is real, but so is $19.7 billion of annual free cash flow that can absorb settlements without touching the dividend.

So what keeps the buy button active? An aging global population, a pipeline stacked with oncology and immunology catalysts, the planned Orthopaedics separation, and a CEO telling me “the depth and strength of our portfolio and pipeline is unrivaled.” The Fed can shake Wall Street all month. I will keep buying the Dividend King that does not need the Fed to win.