Johnson & Johnson Stock Is Always a Buy (If You Hold Long Enough)

It's hard to argue that Johnson & Johnson (NYSE: JNJ  ) stock is not a buy. Ever.

To prove my point, I looked at the multi-year chart and picked out some of the peaks. Even if you purchased near the yearly top, you're still sitting on a better return than if you had purchased an S&P 500 ETF.


Johnson & Johnson Dividend-Adjusted Return

S&P 500 Dividend-Adjusted Return

June 27, 2012



June 8, 2011



April 9, 2010



Aug. 8, 2008



Oct. 20, 2006



Source: S&P Capital IQ.

Of course, Johnson & Johnson stock is sometimes a better buy than at other times. If you purchased near the yearly lows, you're sitting on an even better returns, trouncing the S&P500.


Johnson & Johnson Dividend-Adjusted Return

S&P 500 Dividend-Adjusted Return

June 1, 2012



March 18, 2011



July 23, 2010



Source: S&P Capital IQ.

Run-up helped
The assumption that you'll be OK buying almost anytime works only if you hold on to Johnson & Johnson stock for long enough. I ran similar calculations looking at the returns through the end of last year, before Johnson & Johnson stock went on its monster run. The results weren't nearly as pretty.


Johnson & Johnson Dividend Adjusted Return Through Dec. 31, 2012

S&P 500 Dividend-Adjusted Return Through Dec. 31, 2012

June 27, 2012



June 8, 2011



April 9, 2010



Aug. 8, 2008



Oct. 20, 2006



Source: S&P Capital IQ.

Apart from for the longest holding period -- the exception that proves the rule -- the S&P 500 topped the returns for Johnson & Johnson.

Looking forward
I think the recent run-up is justified, given how pessimistic investors have been over the last few years as Johnson & Johnson dealt with manufacturing issues and recalls. But I wouldn't be surprised if were near a yearly high, given how much Johnson & Johnson stock has increased over the first half of the year.

Fortunately, there are a few upcoming events that could help Johnson & Johnson stock increase in value, or at the very least help prop it up.

Second-quarter earnings are scheduled to be released on July 16. Investors should keep their eyes on Johnson & Johnson's recently launched diabetes drug Invokana. If Johnson & Johnson can persuade doctors to give it a try, there's potential for the drug to compete with Merck's (NYSE: MRK  ) top-selling oral medication Januvia. Taking just a portion of Januvia's multibillion-dollar market would give Johnson & Johnson stock a nice boost.

Investors should also watch Johnson & Johnson's hepatitis C drug Incivo that the health-care giant sells abroad for Vertex Pharmaceuticals (NASDAQ: VRTX  ) . Even though it has to ship some of the profits to Vertex, Incivo is a moneymaker because doctors in Europe haven't started cutting back on prescribing the drug while they wait for next-generation hepatitis C drugs as they have in the U.S., where it's called Incivek.

Johnson & Johnson has one of those in the works, too. Toward the end of the year, look for a Food and Drug Administration approval of Johnson & Johnson's hepatitis C drug simeprevir, which will go up against Gilead Sciences' (NASDAQ: GILD  ) sofosbuvir, which will be approved around the same time. Data from the combinations of simeprevir with its partners' hepatitis C drugs will help investors gauge how well Johnson & Johnson can compete with the all-oral cocktail that Gilead is developing.

If you're on the lookout for high-yielding stocks outside of the health care sector, The Motley Fool's special free report "Secure Your Future With 9 Rock-Solid Dividend Stocks" outlines the Fool's favorite dependable dividend-paying stocks. Grab your free copy today by clicking here.

Read/Post Comments (4) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 01, 2013, at 9:37 AM, marytormey wrote:

    Ethics are a big problem at Johnson and Johnson. J&J will never be able to pay the US government back for the Medicaid and Medicare fraud they committed. We do not want to live in the world J&J is creating, and we do not want to pay for their substandard products anymore.

  • Report this Comment On July 01, 2013, at 11:35 AM, FoolishLonghorn wrote:

    I sold my J&J stock about 18 months ago, and never looked back.

    I grew weary of the constant problems with quality control, possible ethics violations, etc.

    After holding it about 3 years, I essentially broken even on the stock price, and made a bit on dividends.

    Has there been a fundamental change in the way J&J does business, and all of the recalls are behind them? Hard to say for sure, but there had been no significant purge at the top.

    I'll invest in companies where I don't have to fear the next screw-up. Congrats to those of you who stuck it out.

  • Report this Comment On July 01, 2013, at 5:39 PM, altrue1090 wrote:

    The have a game changing drug for depression

    in development. If it works as well as currently described, hold onto the stock.

  • Report this Comment On July 08, 2013, at 12:46 PM, DavidBressler wrote:

    I agree with the article's premise. There are stocks that are great for individual/modest investors that enable an investment strategy that's not like playing a tense game day-in an day-out.

    I'm also pleased to see that 2 of the 3 comments have to do with disappointment regarding the company's "social values". Companies with good values do better (

    There's a really great power investing by using the power of time and the reliability of increasing dividends, instead of "timing and trading".


Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2517122, ~/Articles/ArticleHandler.aspx, 9/29/2016 8:19:47 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,339.24 110.94 0.61%
S&P 500 2,171.37 11.44 0.53%
NASD 5,318.55 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/28/2016 4:00 PM
JNJ $119.39 Up +0.17 +0.14%
Johnson and Johnso… CAPS Rating: *****
GILD $78.97 Down -0.28 -0.35%
Gilead Sciences CAPS Rating: *****
MRK $63.30 Up +0.73 +1.17%
Merck and Co. CAPS Rating: ****
VRTX $88.84 Down -0.28 -0.31%
Vertex Pharmaceuti… CAPS Rating: ****