Longtime Fool Jeff Fischer has been a shareholder and strong supporter of Johnson & Johnson (NYSE:JNJ) over the years, and you've probably seen him discuss the company in these pages several times. He even recommended the stock as a long-term purchase for Fool readers back in March 2003, though he mentioned at the time that the shares looked fully valued and could tread water for a while.

He was right. The stock has fallen modestly since then -- a rare happening for Jeff's picks -- but that brings me to why we're here: I believe the value in J&J shares is even more compelling at this point, especially for investors seeking stable growth and income.

As many of you know, I have the pleasure of authoring the Fool's dividend-oriented investment newsletter, Motley Fool Income Investor. Though J&J's payout does not result in a yield that meets the cut-off for inclusion as an Income Investor recommendation -- the average yield on Income Investor picks is closer to 5% -- I find the company an extremely compelling opportunity just the same, and I'm happy to suggest it to our readers here.

Dr. J&J
Johnson & Johnson is a global company operating a diverse group of health care-related businesses. The 110-year-old maker of Tylenol conducts its extensive, and very profitable, businesses through three operating segments: Consumer, Medical Devices & Diagnostics, and Pharmaceutical.

Though related to the health-care field, this stable of business units actually provides a very diverse revenue stream. That, in turn, makes this firm one of "those companies" that tends to perform well in both good times and bad, allowing its investors to sleep soundly while their investment grows in nice, round, double-digit figures.

J&J's pharmaceutical division competes with drug-industry heavyweights like Pfizer (NYSE:PFE) and GlaxoSmithKline (NYSE:GSK). It has an extensive list of prescription drugs that treat just about every ailment imaginable. This high-margin business segment contributes nearly 50% of the firm's sales.

The medical devices and diagnostics group saves countless lives each year (actually, I think they're countable, but no one's talking). This unit, which contributes over 30% of revenues, sells its wares to physicians and hospitals all over the world. It produces everything from those little drug-coated springs that prop open our arteries (stents) to catheters (ouch) and heart monitors (parentheses here just for consistency).

Certainly, you're familiar with the company's personal-care products, which have been used by consumers for generations. In this vein, the company sells baby, hair, oral, and skin care products, in addition to a full range of nonprescription drugs. You can thank the firm for everything from Band-Aids and baby powder to tri-phasic birth control pills.

As a side note, it seems that you can't walk into a drugstore these days without seeing 32 feet of shelf-space dedicated to J&J's Aveeno skin-care products. OK, perhaps it's not quite 32 feet -- maybe just 20 or so -- but the company's Aveeno and Neutrogena lines are growing like gangbusters nonetheless. All told, the consumer division is a low-risk workhorse that contributes the remaining 20% of revenues.

Buy the numbers
J&J shares are trading at just 16.5 times operating cash flow, 22 times free cash flow, and at 15.6 times forward earnings. These are all very reasonable levels for a company with such a stable history, and a remarkable knack for creating shareholder value.

The company's dividend creates a near 2% yield, which spanks the pants off the average money market yield of 1.2%, and beats the S&P's 1.6% rather soundly as well. The drug maker has increased its dividend each year for over 40 years, which has the effect of creating a much higher yield for shareholders over time. Still, J&J pays out just 35% of its free cash flow (FCF) in dividends each year, meaning there's plenty of room for more substantial increases going forward.

J&J has produced a phenomenal 29% return on its equity (ROE) in the past 12 months, and an outstanding 16% on its assets (ROA). These figures shouldn't come as a terrible surprise, though, as the company has been producing such quality results for decades.

Its gross margins are over 70%, a height approached only by top-tier companies like Citigroup (NYSE:C), Merck (NYSE:MRK), Microsoft (NASDAQ:MSFT), and U.S. Tobacco (NYSE:UST). Those margins will help J&J generate more than $8 billion in free cash flow this year alone.

Despite its size and the challenges that have been facing the pharmaceutical arena, J&J continues to post double-digit earnings per share (EPS) growth and will do so again this year -- making it the company's 20th consecutive year achieving this goal. The company has also been cutting operating costs to further enhance profitability, and I believe we can expect more cost savings going forward.

The Foolish bottom line
The last word is simply that this stock is an excellent, low-risk value for seekers of growth and income. If you'd like to maintain a stable growth component in your portfolio while enjoying some cash along the way, this could be an ideal addition to a diversified portfolio. The bottom line is that J&J should be able to add a nice total return to your bottom line.

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Fool On!

Mathew Emmert has 642 bottles of Aveeno hand lotion in his medicine cabinet, and shares of Microsoft in his portfolio. He doesn't own any of the other investments mentioned here. The Motley Fool has a disclosure policy.