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Johnson and Johnson : Timing May Be Everything

|Includes:Johnson & Johnson (JNJ)

This is a continuing series on how selecting an attractive entry point can make a huge difference in  the dividend reinvestment process.

Today I will look at Johnson and Johnson, (NYSE:JNJ) a diversified company in the medical arena.

This is considered one of the aristocratic companies in the overall stock market with an excellent history of raising dividends. This would include going from an average annual payout of 0.62 per share in the year 2000, to $1.80 per share in 2008.

I will use January,3 as my buy date for the years listed below and I will use a $5000.00 lump sum investment .

Keep in mind, this and other stocks I profile are aimed more for the lump sum investors, as opposed to others that prefer to dollar cost average.



This time frame was the beneficiary of a roaring bull market and a 2-for-1 stock split in 2001. Very impressive overall results .


This time frame was the beneficiary of increased dividends and nice share appreciation. What I found interesting here was the fact that this stock performed pretty well during the overall onslaught of the market between 2000-2002



On January, 3rd this stock was priced at about $56.00 per share, which was off its lows in July, 2002 when the stock was trading at about $42.00 per share. Still not a bad performance helped by increased dividends.


 The above chart I added is showing the purchase of the stock not long after it bottomed. This should be able to demonstrate how important timing the price can be. There is almost a difference in the overall return of almost fifty-percent based on the timing of purchase.


 
This time frame was right before the financial crisis . Since then like the overall market, JNJ has rallied very nicely.


I decided to add January,3,2009 to show again how timing an initial investment purchase to your overall investment strategy can be.

In addition, I added a Sept,3,2008 purchase date for those individuals that might have bought the stock "near the top"


While the recovery has been nice, a strong stomach might have been needed during the market correction.

In conclusion, while JNJ is a great company with a increased dividend history, careful attention should be made to the price of purchase. In my opinion, the stock seems to expensive to take an initial position at this time.
 



Disclosure: I am long JNJ
Stocks: JNJ