Monday, February 18, 2008

Johnson & Johnson (JNJ) Dividend Stock Analysis

Johnson & Johnson engages in the manufacture and sale of various products in the health care field worldwide.

The company is a dividend aristocrat as well as a major component in Dow Jones Industrials and S&P 500 indexed. Over the past 10 years this dividend growth stock has delivered an average total return of 9.76% annually to its loyal shareholders. One of the largest holders of JNJ stocks is no other than the Oracle of Omaha, who is one of the best investors in the world. The company has managed to deliver an impressive 14% average annual increase in its EPS.
































The ROE has been in a 22%-29% range for our study period, which is also an impressive number.
















Annual dividend payments have increased over the past 10 years by an average of 15% annually, which is slightly above the growth in EPS. A 15% growth in dividends translates into the dividend payment doubling every 5 years. If we look at historical data, going as far back as 1970, JNJ has indeed managed to double its dividend payments every five years.
















If we invested $100,000 in JNJ on December 31, 1997 we would have bought 3036 shares (adjusted for a 2:1 split in June 2001). Your first quarterly check would have been for $333.96 in dividend income in early 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly dividend income would have risen to 1486.53 by November 2007 and you would be expecting to collect $1495.66 in dividend income by late February 2008. For a period of 10 years, your quarterly dividend income has increased by 277.27 %. If you reinvested your dividends though, your quarterly dividend income would have increased by 345.12%.
















I also like the fact that the company’s dividend payout has not exceeded 50% over the past 10 years in addition to the low P/E ratio which is less than 20 and the above average dividend yield of 2.60%.


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8 comments:

  1. Thanks dividends4life.
    The stocks which I profile as buys on my blog are stuff I am actually buying for my dividend portfolio. If I had a little more time outside of work and house chores i might be able to do more analisys.

    ReplyDelete
  2. One of my favorite stocks. Great timing as I'll be doing an analysis of JNJ and posting my analysis tommorrow too.

    American Dividend Investor.
    http://americandividendinvestor.blogspot.com

    ReplyDelete
  3. Hi, thnx a lot for the useful information what I have found on your website...But I have a question. I am an last year highschool student and I have to analyse also J&J stocks... Now my questions is: do you think that J&J is a growth stock or rather a Value stock?
    If I analyse the Bèta coefficient than it seems that Johnson is a value stock because Johnson has a Beta coefficients below 1 and this means than that this stock wouldn't be react much to economical ups and downs...
    But when I analyse the ROE and ROA elements, it shows that it is a Growth stock.

    Is it possible to help me with this analysis?

    Can somebody verify my analysis about J&J?

    Thank you very much

    ReplyDelete
  4. Saliyah,

    S&P considers them a growth stock, and have included them in their growth index.

    http://us.ishares.com/product_info/fund/overview/IVW.htm

    In my own opinion however, JNJ gives you a great value for the low price $70/share.

    ReplyDelete
  5. Thank you for responding so quickly Dividend Growth Investor...
    I thought also that JNJ was rather a growth stock.

    I'm not known in the American stock exchange...Normally we have to analyze the Belgium market...Therefore I don't know a lot of useful American websites to use for an analyze..
    Mainly I do an analyze by using the annual reports but thats not enough of course.

    Do you perhaps know also other websites where I can find useful technical information?

    Kind regards,

    Saliyah

    ReplyDelete
  6. Saliyah-87,

    E-mail me at dividendgrowthinvestor at gmail dot com to further discuss your information sources.

    DGI

    ReplyDelete
  7. A good investment indeed - and at the current trading price not 'just' s defensive pick.

    Read more at http://tickertoday.blogspot.com/2008/12/jnj-not-just-defensive-pick.html

    ReplyDelete

Questions or comments? You can reach out to me at my website address name at gmail dot com.

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