Investors are always being told to diversify. Losses in one section of the portfolio can be overcome in other areas.
In Johnson & Johnson's
The company reported a decline in revenue for two products: $100 million less of Procrit and almost another $50 million less of medical device Cypher. Yet it still grew total revenue by 9%.
Procrit, J&J's anemia drug, has been getting hammered by FDA panel after FDA panel, along with Amgen's
But now comes the power of diversity. Drops in sales in some areas, while not fortuitous, can be offset by growth in other areas. Leading the pack was consumer sales of such item as Band-Aids and all those over-the-counter products it got from Pfizer
Not only is Johnson & Johnson diversified in its products, it is also diversified geographically -- another lesson for investors. International sales jumped 16%. Now granted, just like last quarter, sales got a nice boost from the weak dollar, but even without the currency effect, international sales grew twice as quickly as those at home.
While the company certainly isn't in one of its high-growth spurts, diversification in this market is a lesson every investor should be heeding. And J&J's nice 2.7% dividend yield doesn't hurt, either.
Johnson & Johnson and Pfizer are both Income Investor recommendations. To see how dividend-paying stocks can offer both secure income and the opportunity for growth, take a free look at this newsletter with a 30-day free trial.