Portfolio New Addition: Johnson & Johnson

Second stock to be added into my portfolio, Johnson & Johnson has got a range of everyday products that can be found in almost every household. A long-term investment that is aimed to achieve my goal of financial freedom through investments. A look at the rationale behind investing in Johnson & Johnson and a reminder to why it is worth holding on to it.

Johnson & Johnson logo | Investor MonkeyJohnson & Johnson (NYSE: JNJ) is a holding company engaged in research & development, manufacture and sale of a range of products in the health care field, primarily focused on products related to human health and well-being.

Johnson & Johnson is organised in three business segments: Consumer, Pharmaceutical and Medical Devices.

Some of the more popular Johnson & Johnson’s everyday products includes Johnson’s Baby range of products, Band-Aid, Listerine and Acuvue.

Rationale for Additional to Portfolio

Consistent dividend payouts is the main key reason to why Johnson & Johnson is chosen to be added into the portfolio. Not only has Johnson & Johnson been paying shareholders consistent dividends, they have been regularly increasing their dividends for 53-years. Only six other companies have longer continuous streak.

Over the last five years, Johnson & Johnson has an average dividend growth of 7.4% while the Earnings per Share (EPS) growth at 24.59%. The EPS is growing at over three times more than the dividend growth. The much stronger EPS growth shows that Johnson & Johnson will be able to sustain its dividends using its earnings.

With a current dividend yield (TTM) of 2.87% as of August 18, Johnson & Johnson beat the desired current yield of 2% at time of purchase. Dividend payout ratio is at 42.5% indicating that, in the future, if earnings of Johnson & Johnson drops, they still have the room to increase their dividends.

Transaction Details

Date August 18, 2015
Shares 5
Price 99.17
Yield (TTM)* 2.87%
* as at time of purchase