DRIP PORTFOLIO

Drip Port Buys Johnson & Johnson
JNJ is #2 Buy
October 08, 1997

After over one month of analyzing different healthcare companies, in early October the Drip Portfolio decided to begin investing in JOHNSON & JOHNSON (NYSE: JNJ), having found both leadership and value. Though Johnson & Johnson doesn't have the pipeline that Pfizer does, it has had consistent growth, smart acquisitions, and impressive dividend increases historically -- the dividend growth has compounded at 16% annually the past ten years. The company was granted half the price-to-sales ratio of Pfizer at the time of the purchase decision, with a market cap of $77 billion and a price to sales ratio of 3.4. Pfizer, the Drip Portfolio's other strong consideration, had a market cap of $78 billion, or 6.5 times sales at the time. We'll see which company develops the most value for shareholders over the coming years, including reinvested dividends. Pfizer is also still being considered as another purchase for the Drip Portfolio, after an initial base of investments are made.

The articles in this collection lead to the Johnson & Johnson decision, after analyzing SCHERING-PLOUGH (NYSE: SGP), ABBOTT LABORATORIES (NYSE: ABT), PFIZER (NYSE: PFE), and JOHNSON & JOHNSON (NYSE: JNJ).

Fool on!