Prem Watsa: Johnson & Johnson
Like Buffett, whom Watsa admires, Watsa built his financial empire around a solid insurance business, which provided him with a growing float to invest. And like Buffett, Watsa is known for being a patient investor who often holds his best positions for five to 10 years, or even longer.
Watsa’s track record speaks for itself. According to research site GuruForus, Watsa has grown Fairfax’s book value by an astonishing 212% during the past 10 years. This compares to total returns of just 34.9% for the S&P 500. Impressively, he actually made money in 2008. Fairfax saw its book value rise 21% in the midst of the worst financial crisis in 100 years.
Diversified health and pharmaceutical company Johnson & Johnson (NYSE:JNJ) is Watsa’s largest holding by far, and accounts for more than 21% of his listed portfolio. Johnson & Johnson is an obvious choice for a conservative dividend stock, and it is a current holding on the Sizemore Investment Letter’s “Drip and Forget Portfolio.”
It also happens to be one of the highest-yielding major American blue chips, with a 3.5% yield at current prices. And like IBM, Johnson & Johnson has a long history of raising that dividend, earning its status as an InvestorPlace Dependable Dividend Stock.
Given the low repute of ratings agencies, this matters less than it used to, but Johnson & Johnson is one of only four American companies to have its bonds rated AAA. Yes, Johnson & Johnson actually is considered to be less risky than the U.S. government, and its stock pays more in yield. This is one you can buy and lock in a proverbial drawer.