Healthcare firm Johnson & Johnson (JNJ) has been an investor favorite for years, and for good reason. The company’s strong brand name, impressive product portfolio and sturdy financials make JNJ stock a good choice for long-term investors.
Although Johnson & Johnson stock is not particularly cheap, and it isn’t likely to make big bucks right away, the company has proven itself as a solid defensive investment that will deliver steady returns over time.
JNJ reported first-quarter results back in April, and the figures were impressive. Johnson & Johnson generated $17.5 billion in revenue, a 0.6% increase from last year’s results. While that doesn’t sound like much, the company was battling quite a few uncontrollable factors, such as currency headwinds, which cost the firm 3.3%.
The other big takeaway from JNJ’s earnings report was the promise that the firm’s drug portfolio is showing. Imbruvica, JNJ’s new blood cancer drug, proved to be a standout treatment with its sales figures doubling over the past year.
The results also showed that several of JNJ’s other treatments are holding their own in the marketplace, despite the introduction of competitors.
The Backbone of JNJ Stock’s Long-Term Endurance
Part of the reason that Johnson & Johnson stock has such a promising future is its solid business model. JNJ is made up of three different areas: medical devices, pharmaceuticals and consumer goods. Each area has its own strengths to bring to the table, and most analysts see all three continuing on a strong path to growth in the coming years.
JNJ’s consumer goods arm includes products like Band-Aids, cosmetics and baby items, and the firm’s brand strength in this space is impressive. For those who believe that the U.S. economy is on a downward spiral, this area makes JNJ an attractive buy.
Even when money is tight, consumers will still need to purchase the essentials.
It is worth mentioning, however, that JNJ was involved in a widely publicized court trial regarding its talc-based powder products earlier this year. A woman who’d been using JNJ talcum powder for years said it was the cause of her ovarian cancer. A Missouri state court agreed and Johnson & Johnson was ordered to pay $55 million worth of damages.
The case caused many to question the safety of talcum powder and perhaps JNJ products overall, but the fallout hasn’t been monumental. While it’s true that baby-care sales declined in the first quarter compared to last year’s results, they make up only a tiny fraction of the firm’s revenue and it’s unclear whether that was a direct result of the court case.
Even if the talcum powder scare has significantly decreased consumers’ trust in the JNJ brand, most people are unaware of which brands fall under the Johnson & Johnson umbrella. Not only that, but JNJ has a history of taking action to ensure its name isn’t tarnished, so it’s likely that the firm will up its quality control standards for talcum powder in order to calm the public’s concerns.
Is JNJ Worth It?
JNJ stock is certainly not a cheap buy with shares trading around $113. However, it represents a sound investment that delivers consistent returns.
The stock has a 2.8 percent dividend yield and since Johnson & Johnson has been paying out a dividend for over 50 years, it’s likely to continue. The firm is also one of only two AAA-rated companies in the U.S., meaning that there is little doubt in JNJ’s financial strength and staying power.
So while JNJ stock isn’t a bargain buy, it is a reliable income generator that is a low-risk, long-term buy.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.
