GregT

J&J vs. 10-Year T-Bonds: The Power of Rising Dividends

Good article and JNJ is an excellent example to use for this discussion. I have owned them for close to 20 years.

And the 10% projected gain is a very conservative one. It is using the current P/E which is quite low. It is using a fairly low dividend growth rate estimate. And it does not include the impact of share buybacks which could add another 1 or 2 percent to the annual gains.

So while JNJ has not provided a great return over the past 10 years, it is very likely to be a great holding over the next 10.

4 Dividend Stocks to Hedge Against Social Security Failure

The reason to buy these stocks rather than munis or other high yielding stocks is dividend GROWTH. The income producing securities that User251091 mentioned offer either little or no income growth. Dividend growth stocks increase their payout each year. It is like a government worker with a COLA pension - except that many good companies increase their dividend much more than the rate of inflation.

How Will a Single Payer Health Care System Affect Pharmaceutical Prices?

But an 8% drop in revenue can translate into a much bigger drop in earnings per share - perhaps as much as 30%. Assuming that P/E's stay the same, it could mean a 30% share price drop. Granted, some of this drop has already been priced into the current stock prices, but not the full 30%.

Johnson & Johnson Profit-Taking Likely, Offering Better Entry Point

Good analysis. JNJ has many characteristics common with both health care stocks and consumer staples stocks like PG and PEP. The recent runup and 52 week high coincides with runups for both of these categories and is not specific to JNJ alone.

The bullish argument for JNJ is that even at the current price of 71, it is a pretty good value. The bearish argument is that growth is not what it used to be as the company has gotten larger. It would take quite a catalyst to give JNJ any kind of significant boost.

Most likely JNJ's stock price will grow at the same rate as it's EPS over the next 5 years unless something unusual happens. With the uncertainities for both the markets and economy, JNJ represents a safe have that should provide stability to a portfolio.