Johnson & Johnson

Johnson & Johnson (JNJ) is a holding company with subsidiaries operating in three healthcare-related business segments: Consumer, which includes baby care, skin care, oral care, wound care, and women's health fields among others; Pharmaceutical, which includes anti-infective, antipsychotic, contraceptive, dermatology, hematology, immunology, and neurology among others; and Medical Devices and Diagnostics, which includes products distributed to wholesalers, hospitals and retailers.

During a conference call on October 16, 2012, Dominic Caruso, Vice President for Finance and CFO, summarized JNJ’s third quarter results:

“Despite continuing marketplace and economic pressures, we reported solid sales growth in the third quarter of 6.5%, which was slightly higher than analyst estimates as published by first call. Foreign currency, in particular the weak euro, continues to negatively impact sales results. Third quarter sales on an operational basis excluding the impact of unfavorable currency grew 10.8%. Currency translation negatively impacted sales by 4.3%.”

Earnings per share for the first nine months of 2012 were $2.96, compared with $3.40 for the first nine months of 2011.  Adjusted earnings per share for the first nine months of 2012 was $3.91, compared with $3.87 for the first nine months of 2011. 

In April, 2012, JNJ increased the quarterly dividend from 57 cents to 61 cents. Dividend increases have occurred annually since 1963. If the present trend continues, another dividend increase may be announced in April, 2013. 

The JNJ closing price on December 24, 2012 was $70.02. At an annual dividend rate of $2.44, the yield is 3.5%. I think this company is worth investigating for inclusion in a dividend portfolio. It offers both growth and stability. Morningstar indicates that the long-term debt as a percentage of capital is 14%. I own shares of JNJ and I would consider adding more at $68.50 or less, and I would consider selling some shares at $76.25. As always, this is not a recommendation to buy, but a suggestion for a stock to study. Price is an important factor. Use your own judgment. 

JNJ will host an analyst meeting at 8:30 a.m. (Eastern Time) on Tuesday, Jan. 22, 2013, to discuss fourth-quarter and full-year 2012 financial results.