Booking Profits — Never Ever a Bad Thing! Puerto Rico — Fun in the Sun June , twib. Ask the readers — What motivates you on your quest for financial independence? JNJ reported Q3 earnings last month. There are many reasons why we like JNJ and have made it a core position in our Conservative Retirees dividend portfolio. As a result of its competitive advantages, JNJ has earned a relatively high and stable return on invested capital over the last decade:.

While generics are taking market share and regulations can always change, there are several fundamental factors that make the pharma space appear to be a good long-term bet for JNJ. The elderly population drives about a third of industry sales and should see secular growth as the average age of people increases around the world.

Ground-breaking discoveries in genomics and biotech will also catalyze new drug development. FDA approvals of new molecular entities are also happening at a faster pace, with 41 approvals in up from 27 in and 39 in Pharmaceutical manufacturing is one of the most profitable industries in the world.

However, it is a notoriously difficult business to get started in. Increased safety concerns and government regulations add further challenge to competing successfully in this industry. We think the buyback plan leaves JNJ with plenty of financial flexibility to pursue deals and appears to have been a low risk move.

Buy and Hold This Dividend Stock Forever

The stock also trades at about 15x earnings, net of excess cash on the balance sheet — an ostensibly fair price to pay. Large acquisitions can make or break a company, but JNJ has proven to be a disciplined dealmaker — over the last 20 years, it has acquired companies but only 13 of those deals were greater than a billion dollars.

We expect the company to be rewarded by the market when it ultimately makes its next deal, and given the run biotech stocks have had, patience seems prudent. Within its other businesses, medical devices and consumer products, continued innovation will be the key to combat pricing pressure.

Rising access to healthcare in emerging markets and aging demographics also help offset some of these potential pressures. From a dividend growth perspective, JNJ has raised its dividend for more than 50 consecutive years.

JNJ trades at about Conclusion For dividend investors living off dividends in retirement , JNJ remains a solid company that has great potential to continue growing its dividend faster than the rate of inflation for years to come. These are the types of dividend stocks we like to own for the long haul and enjoy the predictable income growth they give us each year.

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Start day FREE Trial Pricing Contact Us Log In. Home Dividend Safety Scores Portfolio Analyzer Best Articles Newsletter. As a result of its competitive advantages, JNJ has earned a relatively high and stable return on invested capital over the last decade: Simply Safe Dividends T June 21st, 1 Comment. June 20th, 2 Comments. June 16th, 2 Comments. Leave A Comment Cancel reply Comment. Get the best dividend stock ideas delivered straight to your inbox.