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)
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.
ReplyDeleteThis 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.
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.
ReplyDeleteAgreed. 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.
ReplyDeleteMCM, 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.
ReplyDeleteGood 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.
ReplyDeleteWith respect to the tax issue, you also have to look at with-holding taxes on dividends paid by non Cdn. companies.
maxroi,
ReplyDeleteI own some in an RSP and some in a non-sheltered account.
thicken,
good point about the 15% withholding tax
J&J is one excellent company.
ReplyDelete