Johnson & Johnson

The all-rounder in the healthcare industry

The stock chart, the dividend, the outlook – all of it points to a super healthy, solid company. And that's exactly what Johnson & Johnson is. Hardly any other publicly traded company in the healthcare industry is as diversified. Johnson & Johnson isn't just in the market with pharmaceutical products, but also with consumer goods and various medical technologies.

From care products like the well-known Penaten cream, to oral hygiene with Listerine, to artificial knee joints and highly effective drugs for treating life-threatening diseases. All these different business areas should keep bringing the group growing revenue and profits for shareholders in the future.

The history and business model of Johnson & Johnson

It all started in 1886 in New Jersey (USA), when the 3 brothers Robert, James, and Edward Johnson teamed up and founded their own company. At first they focused on making products for sterile wound care. No fewer than 3 disasters quickly made the company well known and popular with the public. During the Spanish-American War in 1898, after the Galveston hurricane in 1900, and after the San Francisco earthquake in 1906, Johnson & Johnson provided medical products for emergency relief, sometimes free of charge.

Today, Johnson & Johnson makes its money in 3 sectors. 47% of revenue comes from pharmaceuticals. Here the focus is mainly on treating cancer, HIV, nervous system disorders, and diabetes. The company earns 35% of its revenue with medical technology. Thanks to several acquisitions and one of the most innovative research departments, J&J is one of the world's largest manufacturers of medical implants and surgical instruments here. The remaining 18% of revenue comes from the consumer business. Here Johnson & Johnson sells, among other things, the popular Bebe moisturizing cream and over-the-counter drugs like Imodium and acetaminophen.

What does the future bring for Johnson & Johnson?

Johnson & Johnson's management has set the company up extremely well for the future. Something many long-term investors will surely be happy about is the 4-point plan management wants to implement.
1) They want to grow faster than the market. 2) Profit is supposed to grow faster than revenue. 3) They're aiming for growth both organically and through acquisitions and partnerships. 4) The dividend policy is to remain as reliable as before.

Can the dividend keep being paid and raised?

Here Johnson & Johnson leads by example. A dividend has been paid without interruption since the IPO in 1944. On top of that, it has been raised every year since 1962. So they more than deserve the title of Dividend King. Currently the dividend yield is 2.8%, which on its own isn't bad at all. But if you factor in the annual increase of almost 7% (average of the last 10 years), you get a really generous payout over the long run.

Conclusion:
The healthcare group Johnson & Johnson shines with excellent metrics. It's diversified and very well equipped for the future. Even at an all-time high, it's worth getting in for the long term. If the stock corrects at some point – all the better. This is truly a super fit investment that lets you sleep well at night.