Healthcare Sector Ideas

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>>> Johnson & Johnson (JNJ)


https://www.thestreet.com/story/13646215/1/10-best-dividend-stocks-to-own-now-for-a-safe-retirement.html?puc=yahoo&cm_ven=YAHOO



When it comes to the virtues of being dependable, predictable and reliable, there are few companies like Johnson & Johnson. Like many other conservative dividend investors, the company is one of my favorite blue-chip dividend stocks.

Founded way back in 1886 to create antiseptic surgical dressings, today JNJ is a highly diversified $70 billion company; the 8th largest healthcare enterprise according to Fortune Magazine.

The company is organized into three business segments: Consumer (19.2%), Pharmaceutical (44.9%) and Medical Devices (35.9%). A short list of the dozens of everyday brand names includes: Listerine, Band-Aid, Tylenol, Johnson's baby products and Neutrogena. The pharmaceutical segment is unusually diversified. Of the 16 top selling products only Remicade prescribed to the treatment of arthritis represents as much 9% of total J&J business. The medical device business is every bit diversified including Orthopedics, Surgery, Vision Care, Cardiovascular and Diabetes Care.

Johnson & Johnson employs over 127,000 worldwide with the revenues dividend almost equally between the United States and International. For safety in retirement, it is hard to find a better balance.

The Food And Drug Administration in the U.S. and similar bodies in most countries regulate the healthcare industry. Approval requires millions of dollars and many years investment in research and development to prove safety and efficacy. Patents that limit or prevent competition protect most products. The high cost of development as well as increasing government efforts to contain cost inflation has lead to consolidation of the industry.

Johnson & Johnson has raised its dividend for more than 50 consecutive years, making it one of the most reliable dividend-paying stocks in the market as well as a member of the exclusive Dividend Kings list.

The quarterly dividend was last increased in April to an annual rate of $2.40 providing a current yield of 2.6%. Dividend growth has been an above average 8.8% over the past 10 years and 6.9% over the past five.

A safe retirement with JNJ also means a growing payout. Here is why. JNJ pays out just 55% of earnings. The company is highly profitable (25% operating margins) and generates huge amounts of operating cash flow ($19 billion). A payout ratio of as much as 75% would not harm the company's flexibility.

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