Wednesday, April 18, 2012

New Purchase - JNJ

I bought 20 shares of Johnson & Johnson (JNJ) at $63.16 plus commission today.  This purchase will add $45.60 to my annual income based off the current dividend.  It's been a long time since I've bought JNJ stock, I figured now would be a good time to make an addition with recent bad news.  JNJ has had problems with product recalls the past year and has been fined for questionable drug advertising in a court case.  I typically make purchases when prices decline in companies I want to own. 

JNJ is a remarkably stable stock that has a long history of dividend increases.  I expect the company will announce their 50th consecutive increase later this month.  Historically JNJ is renowned for high dividend growth, I think this year we'll see a small increase of only 4-5% or so.  The past year has been challenging for JNJ, but I still like the company long term.  I use many Johnson & Johnson brands such as Acuvue, Tylenol, Aveeno, and Band-Aid.

12 comments:

  1. JNJ should be a good long-term buy if they can fix their current problems. I have 35 shares that I bought last year at $63.00, so I haven't seen any sustained price appreciation. However, I get nearly $20 in dividends from JNJ each quarter, which is nice.

    I haven't bought any healthcare stocks for several months because I was very overweight in that sector at the end of last year (I own ABT, BDX, JNJ, MDT, and NVS). Healthcare still makes up 21% of my portfolio, so I will likely build up positions in other sectors until that number is a few percentage points lower. I do like healthcare sector for the long term, though, considering the health problems that are likely to arise among all the aging baby boomers.

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    1. I do not expect large price appreciation from JNJ, but I do expect they will fix problems. My initial investment in JNJ was made January 2011. It's been over a year since I've invested in the company, I did pay a little more this time around. I'm trying to increase the health care sector in my portfolio. Right now I only own ABT and JNJ. I like MDT and OMI for a third position. I actually had a limit order in for OMI earler this month, but it was not filled.

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  2. Nice purchase. I think JNJ is attractive at today's price. It hit my target price to buy but I already initiated a put last week that allows me to buy more at a lower price. I agree with deedubs that the baby boomers will keep the healthcare sector performing very well for years to come. I only have NVS, JNJ, BDX and OMI. I'd like to add more OMI or JNJ soon.

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    1. I was very tempted to pick up OMI under $29 the past week, infact I put in a limit order which wasn't filled. I like JNJ too and decided to go that route. I plan on initiating a position in OMI or MDT sometime this year.

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  3. JNJ is on my list too, along with BDX and MDT. Buying at current levels is a simple strategy which will hardly go wrong in the long term. However I use put options to play JNJ. Should it fall for whatever the reason I will be forced to buy at a cheaper price, which is exactly what I want. If they never fall I will collect put option premiums and keep rolling them over after expiration.

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    1. Sounds like a good strategy. I've never used puts before, but it makes sense. I am able to write covered calls and have a few times in the past. I don't think I am able to buy/sell puts, I'd need to apply for it.

      The problem in my situation is that to do a put it would use a lot of cash. 1 contract (100 shares) of JNJ would tie up over $6,000. Unfortunately I do not make a lot of money in my chosen profession. If I was able to earn and save more I would look closer at the put strategy. I bet you will do well.

      One annoyance with options is the high transaction costs. I once wrote a covered call and was charged a commission. Later on it happened to be called and my broker charged me another commission. Being charged 2 commissions really upset me, I didn't realize I would be charged a second time in the event of a call.

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  4. Nice buy here my friend. I like JNJ for the long-term and believe they'll eventually right this gigantic ship. It's my second largest position behind PM, so I haven't added to any in quite a long time. I think today's price, however, provides a DG investor an attractive opportunity.

    Good stuff!

    Best wishes.

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    1. Whoops. JNJ is actually my third largest position behind PM and PEP. :)

      Maybe I need to add to it a bit after all.

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    2. DM,

      Thanks for the support. I see JNJ has been approved to acquire synthes. It seems that deal has been on the table forever. I believe JNJ will right the ship, it is one of the most admired corporations in the world.

      Man, I'm glad we got into PM when we did. It's amazing what that stock has done the past 6 months.

      CI

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    3. CI,

      PM has been quite a monster!

      Although LO has been even stronger in this segment. That one has been absolutely crazy.

      Best wishes.

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  5. I found that JNJ is very popular stock. Will look at whats up with that stock. Personaly I would buy Chevorn and Exxonmobile as their value is now very low compared to their generated profit.

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    1. FA,

      CVX and XOM are both excellent companies. I'm always looking to add to my CVX position. I would buy around $95-97. Maybe $100.

      I try to stay diversified throughout the sectors. I added JNJ to increase the healthcare sector in an attempt to keep my portfolio balanced.

      CI

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