Johnson & Johnson (JNJ 0.87%) released its fourth-quarter earnings on Jan. 22. The results were mixed, with earnings per share of $1.88, which came in above analyst expectations of $1.87 despite its top line of $20.74 billion missing Wall Street's estimates of $20.8 billion. The stock was initially down around 2% on the results but it has since climbed back up.  

But let's take a closer look at J&J's final report for fiscal 2019 to see whether the healthcare stock is still a good buy.

Strong growth continues, but so does legal trouble

For the full fiscal year, J&J's total revenue was up just 0.6%, going from $81.6 billion to $82.1 billion. But the company's largest segment, pharmaceuticals, was also its best with sales growth of 3.6%. Multiple drugs grew by double digits this past year. 

It's an impressive performance given the adversity the company has faced in recent years relating to its products. Thousands of people have sued the company over claims J&J's baby powder products caused them to develop cancer. In 2018, a jury ordered J&J to pay $4.7 billion to 22 women who developed ovarian cancer from the products. Then in 2019, a judge in Oklahoma ordered the healthcare giant to pay $572 million as a result of its role in the state's opioid crisis. Later that year, the company incurred a hefty fine of $8 billion in punitive damages for side effects related to its Risperdal drug which is used to treat mood disorders, including schizophrenia due to claims it caused patients to develop gynecomastia (or the growth of breasts in males). J&J appealed the fine and a judge reduced it to $6.8 million, but it's yet another product that has put a black mark on the company's image. 

Thanks to its diversification, J&J has plenty of products that are doing well for the company. Stelara, in particular, continues to be a great performer. The drug, which treats Crohn's disease, generated $6.3 billion in sales in fiscal 2019 at a growth rate of 23.4%. Darzalex, which treats myeloma, a form of blood cancer, also saw tremendous growth of nearly 50%. With sales of $3 billion worldwide, it has the potential to be a key contributor to the company's pharmaceutical sales if it keeps growing at this clip. 

Medical products in a pharmacy.

Image source: Getty Images.

And even though the company's medical device revenue was down 3.8% overall, that was mainly due to U.S. sales, which were down 3.5%. International medical device sales declined by 4.1%, but without the impact of foreign exchange, that revenue would have been just 0.1% lower than in the prior year.

What was surprising is that in the consumer segment,J&J's sales were up 1.4% in the U.S. in 2019. However, revenue from its baby care products declined by 14.2% year over year in the U.S. and by 8.6% in international markets.  Overall, the company's consumer segment did well internationally where sales were down 0.4%, but had it not been for foreign exchange, revenue would have increased by 4.2%.

J&J expects its growth to continue in 2020 with guidance indicating adjusted diluted earnings-per-share growth between 3.1% and 4.8%. The company also forecasts reported sales to rise between 4% and 5% this year. 

18% profit margin intact despite litigation expenses

J&J's earnings of $15.1 billion for the year were down 1.2% from 2018, but they were still more than 18% of the company's top line. An 18% profit margin is very strong, especially given that the company incurred more than $5 billion in litigation expenses during the year by fighting and settling lawsuits. 

The strong bottom line is a testament to the company's resilient and diverse product base, which allows it to produce healthy profits in the face of adversity.

Why J&J is still a good long-term investment

What the company's year-end results showed is just how well diversified J&J is and how powerful a brand it still is. Although the company is struggling in the U.S. market, that isn't the case internationally, where it continues to grow and perform well. 

J&J still faces many challenges relating to baby products and there's a lot of uncertainty about its role in the opioid epidemic. In January, Washington announced it was the latest state to sue J&J in relation to the opioid crisis and more states could decide to do the same. However, despite the risks involved, the company still has many good products valued by consumers. And as long as it continues innovating and developing quality products, it'll remain a solid healthcare stock to buy and hold for many years.

Over the past five years, J&J's stock has risen 47%. Although it underperformed the S&P's returns of 57% during that time, it's still a good investment once you factor in its dividend. A Dividend Aristocrat, J&J has rewarded long-term investors, increasing its payouts for more than 50 years in a row. Currently, the stock pays a dividend yield of 2.5%, which is well above the S&P 500 average of 1.85%.

There's undoubtedly some risk involved in holding shares of J&J, but with the company generating more than $80 billion in sales and an impressive bottom line, it's a calculated one that can more than pay off in the long run. Trading at a forward price-to-earnings ratio of 15, J&J's stock is a good option for value investors as well as dividend investors who are looking for a steady stream of dividend income.