Just Bought JNJ and Here's Why

01 Oct 2015 22:19

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Last week I saw an opportunity to increase my dividend growth portfolio and purchased Johnson & Johnson (JNJ) increasing my annual dividend by $48.

Whenever you read about someone purchasing JNJ its usually followed up with "Great company with 53 years of uninterrupted dividend increases and low dividend payout ratio". These are some pretty good metrics but there are other items that define the strength of JNJ and here are the additional reasons why I jumped on the JNJ band wagon.


1. JNJ's 53 year dividend growth streak has beaten inflation every year except one (1980)


2. Their debt ratio is 0.47 and they have enough annual income to pay annual interest on that debt 38 times over

3. Their dividend growth comes primarily from earnings growth & improving margins (not by stock buybacks)

4. Over the last 3 years they have grown Net Cash from Operating Activities by 20%

5. Gross Profit Rate is a whopping 69%

6. Return on Assets has steadily improved to a current 12%

7. Massive free cash flow that consistently exceeds dividends paid

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