Friday, May 25, 2007

JNJ (again)

With the CDN pushing against 30 year highs I decided to increase my position in JNJ. I’ve posted these reasons before but here they are again:

-44 years of consistent dividend growth.
-Dividends issued to shareowners every quarter since 1944.
-Dividend raised each year for 44 consecutive years.
-Sales have increased each year for 73 consecutive years.
-Double digit Earnings increases for 21 consecutive years.
-Current yield of 2.50%
-44% of sales outside of North America
-ROE levels of above 21% for the past 10 years
-Current P/E – 16.18
-Projected 2007 P/E – 15.3
-Projected 2008 P/E – 13.44
-4 Star rating from S&P - $74 one year target
-Argus rates it a buy with a $76 one year target

I like their diversified holdings within the healthcare sector particularly their consumer products.

(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)


MG (moneygardener) said...

These P/E levels are historically low. I caught Jim Cramer last night basically saying that JNJ is a dog and will finish the year at $63. I don't agree.

This is a phenomenal company that tends to be underestimated in the market. They are so consistent that I would be quite please with 7-8% growth plus the dividend each year, knowing that I bought in when they were trading a historically low levels.

Middle Class Millionaire said...

I would tend to agree with you. Although Jim Cramer is obviously a successful trader his style is dramatically different than mine and yours. He takes a “go big or go home” kind of approach and his recommendations change from month to month based on the latest quarter, whereas I tend to buy on a weaker quarter. I think we are more long term investors. I don’t plan on selling JNJ ever...and will be happy with an 8-15% annual share price appreciation plus a 5 to 10% annual increase in the dividend. Jim Cramer may have a $63 target but S&P has a $74 target and Argus has a $76 target. I guess time will tell.

MG (moneygardener) said...

Agreed. I wouldn't care much if the stock finished the year at $63 anyway. I won't be selling this one anytime over the next 15 years.

maxRoi said...

MCM, I've been eyeing JNJ for a little while now too. Are you buying it in a non-registered account? I understand that foreign dividends get taxed like regular income in non-registered accounts. Is there any way around this or any effective strategies to reduce the tax? I'm curious to know if you have thought about this.

Thicken My Wallet said...

Good pick. I am not a big believer in target prices but JNJ is a fundamentally sound company with retail products off-setting any slump in their pharma pipeline.

With respect to the tax issue, you also have to look at with-holding taxes on dividends paid by non Cdn. companies.

Middle Class Millionaire said...


I own some in an RSP and some in a non-sheltered account.

good point about the 15% withholding tax


J&J is one excellent company.