Tuesday, January 17, 2012

Johnson & Johnson JNJ Dividend Machine January 17, 2012 a core holding

English: logo Johnson and Johnson Česky: logo ...
English: logo Johnson and Johnson Česky: logo Johnson and Johnson (Photo credit: Wikipedia)
Johnson & Johnson (JNJ)

            It may seem funny that my Dividend Machine for this week, January 17, 2012 is one of the few stocks that is not up today.  However, this company is one you want to own for a long time.  Just think about how many products you need and you use that are produced by Johnson & Johnson.

            JNJ has paid dividends since 1944 and has raised them every year for 49 years.  A lot has happened over the past 49 years that could derail even the best company.   Any company that can increase our income through thick and thin is a company we want to own for income.

            JNJ’s last four quarter earnings have been $4.10 per share.   Their last four quarter dividends have been $2.22 per share.  If you own JNJ by February 24, 2012 you will be paid the quarterly dividend of $.57 on March 13, 2012.

            Fundamentals are important to every income investor.  While I do not use stock price as one of my selection criteria, I do concentrate on four fundamentals.   One is that the dividend has to be greater than three percent and JNJ’s annualized (four dividend payments of .57 each) yield at today’s price of $65.22 is 3.495 percent.   A second criterion is the company has to have increased the dividend for at least five years and with their 49 year history we have every right to expect JNJ to continue to increase our income.  Earnings need to be greater than the dividend and here again, JNJ passes with flying colors.  Finally, D/E ratio (debt to equity ratio) has to be 1 or less.  JNJ’s D/E ratio is .30.  Folks, this is a solid company.


            If any company qualifies as a core holding it is JNJ.   Use this profile as an example of the characteristics a Dividend Machine should own.

Very Truly Yours,

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