Dave Ramsey Says Single Stocks Are a Gamble. What That Means if You Live on Dividends
Dave Ramsey has called single stocks a gamble for years, but retirees who pay their bills with dividends from stocks like Johnson and Johnson are making a very different bet. Whether his rule protects them or costs them depends on…
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Dave Ramsey has given callers the same answer on The Ramsey Show for years: “Single stocks are pretty much a gamble.” That advice runs into a problem for a lot of retirement-minded investors, who build portfolios of individual dividend payers on purpose so the income covers their bills. To test his rule against one of the safest-looking stocks around, start with Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction). It raised its dividend for the 64th consecutive year.
Ramsey’s Rule Has Stayed the Same for Years
On a November 2022 episode, Ramsey told a caller that “single stocks are more risky than mutual funds. Okay? Period, no exceptions. Because you’re violating the diversification rule.” In February 2023, Dave Ramsey set a ceiling for investors who insist on holding them: “not to have more than 10% of your net worth in single stocks. I buy mutual funds. That’s all I do.”
In June 2025, Dave Ramsey explained where the risk comes from: “if you put 100,000 bucks in one company, whatever that company does causes you to take your breath away, positively or negatively.” A few days later, Dave Ramsey said on air: “We only recommend mutual funds when it comes to investing in the market. And that just means a giant group of stocks.” You can find the show archive on the Ramsey Solutions website.
A mutual fund pools money from many investors and buys dozens or hundreds of stocks. An index fund is a type of fund that simply tracks a market benchmark. Diversification means spreading your money out so that one company falling apart barely moves your total.
Best Case for Owning J&J Directly
In April, J&J raised its quarterly dividend 3.1% to $1.34 per share, up from $1.30. That works out to $5.36 a year going forward. The quarterly payout was $0.80 in 2017. The stock yields 1.98% and has a beta of 0.235, which means it has usually moved far less than the overall market.
Management says the business is broad enough to absorb a hit. The finance chief, Joe Wolk, said on the July call: “We are not dependent on one or two products. We have a broad, durable portfolio that has 28 platforms, each generating more than $1 billion in annual revenue.” The company expects full-year free cash flow approaching $21 billion, and the stock is up 185.67% over ten years.
Where Ramsey’s Warning Still Applies
Even a Dividend King can get hit hard by one product. Biosimilar competition cut STELARA revenue by 59.7% to $656 million in the first quarter, according to J&J’s 8-K filing. The drug fell another 55.7% in the second quarter. Litigation charges came to $330 million in Q1 after $854 million in Q4 2025. First-quarter net income dropped 52.4% and free cash flow fell 55.4%. J&J also plans to spin off its Orthopaedics business within 18-24 months.
The share price shows the swings Ramsey talks about. Over the past 52 weeks, the stock has traded between $178.89 and $281.07, and it lost 4.44% in the last week alone.
Who Each Approach Fits
Ramsey is right about investors who are still building wealth. They care about total return, they reinvest everything, and they have no reason to tie their outcome to a few CEOs. For them, broad funds are the better default.
Retirees living on income have a different goal. A portfolio of chosen dividend payers produces a reliable check that tends to rise over time. A fund’s payouts change whenever the fund changes its holdings or distributes capital gains. J&J shows how reliable a single payer can be.
STELARA shows how quickly one revenue stream can decline. Under Ramsey’s 10% ceiling, J&J and every other individual stock would have to share that one small piece of net worth. Income investors who go past that limit need enough companies and sectors that one dividend cut won’t break the household budget (we ranked ten Dividend Kings by valuation right now in a free report you can grab here).
Coming up for J&J: the Enterprise Business Review on December 8, 2026, and the Protect4 heart-pump trial results in 2027.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
