Johnson & Johnson: A Surefire Retirement Stock

If you’re investing for your retirement, it can free you up to invest how you’d like. Because you most likely have a longer time horizon, you don’t have to try to choose hot stocks that are going to pay off immediately.
Instead, you have the luxury of time working for you.
You can afford to be patient. You can look for stocks that might not be as flashy, but over time make solid, steady gains. And surprisingly, you don’t have to dig very deep. Some of the greatest stocks for retirement are hiding in plain sight. Johnson & Johnson (NYSE: JNJ) is perhaps the perfect example.

A slow and steady winner

Johnson & Johnson is a health care stock that’s well positioned in its industry. It’s a drug manufacturer, but it’s much more than that. With its three main divisions – medical, pharmaceutical and consumer – it has the kind of product mix and business thrust that can see it through difficult times.
The company has a $300 billion market cap. Its annual revenue is nearly $75 billion from sales of its pharmaceutical drugs, medical devices and consumer products. In the last 12 months, it posted net income of $17 billion, with earnings per share a shade over $6.
JNJ boasts a healthy balance sheet, with $33 billion cash on hand, nearly $12 a share. Its total debt is $15 billion, but it produces nearly the same amount in free cash flow, $14 billion.
It pays an annual dividend of $2.80, which gives it a current yield of 2.6%.
JNJ constantly develops new products, from its Animas-Vibe glucose monitoring system to its full line of Aveeno body care lotions.

A slow and steady game

Johnson & Johnson stock was a slow mover for several years, even as the bull market roared ahead. In the last couple of years, though, JNJ shares have gone from $70 to over $107, a more than 50% gain.
In the last five years, JNJ increased its annual dividend from $1.93 in 2009 to its present $2.80. That’s a 45% increase in just five years.

In good company

JNJ is in the same league with a lot of other supposedly boring, blue-chip stocks.
Many of these are prominent names, such as Procter & Gamble (NYSE: PG), General Electric (NYSE: GE), and 3M (NYSE: MMM).They are high-quality companies whose stocks may not soar in a bull market (though sometimes they do), but which tend to hold their value better during or after bear markets or corrections. These companies and their stocks have a long history of mostly success, and thus are ideal for the slow, steady game of retirement investing.

An ‘Aristocratic’ play

Johnson & Johnson has not only raised its dividend every year for the last five years – it’s done so for the last 52 consecutive years. Stocks that have done so for at least 25 years are called Dividend Aristocrats, and JNJ has more than earned that title.
Such consistent dividend increases are a mark of underlying value of the company and its stock. In the last 10 years, JNJ has produced a total return of 8.9% compared to a 7.4% return for the
S&P 500, according to Bloomberg data.
Johnson & Johnson, with the power of its steadily growing business and its constantly growing dividend, gives investors a great chance at dependable gains for years to come.
It may not be exciting in the short term. But it’s a surefire stock for your retirement.

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