JNJ

Johnson & Johnson: A Dividend Growth Gem

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In Johnson & Johnson’s (JNJ) third-quarter report, released October 13, reported results weren’t all that rosy for the Dividend Growth Newsletter portfolio holding. Revenue and adjusted earnings per share fell 7.4% and 7.5%, respectively, compared to the third quarter of 2014, as domestic sales decreased 0.6% in the quarter and international sales dropped 15.7% on a comparable basis. It’s not something that we were very pleased to see, but for a variety of reasons, reported results don’t quite tell the whole story. For one, on an operational basis, which excludes foreign exchange and a number of other items, Johnson & Johnson’s quarterly results were much more encouraging. Foreign currency exchange rates had a negative impact of 8.2 percentage points on … Read more

5 High-Yielding Strong Dividend Growth Stocks for the Long Haul

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We’ve never been more concerned about the financial health of dividend growth investors. Perhaps we’re partly to blame for some of the excitement surrounding the strategy that has taken many corners of the web by storm, but we continue to believe it is important for investors to strive to understand the strategy’s fundamental fallacies, which can’t be talked about enough as a means of helping investors understand key risks.   For those new to dividend growth investing, part of the strategy centers on identifying stocks that pay dividends that are poised to increase over the long haul, generating in time a yield (a payout) that is a) sufficient on the cost and b) sufficient to generate an adequate income in retirement … Read more

J&J’s Quarterly Results Not Reflective of Underlying Strength

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Dividend Growth Newsletter portfolio holding Johnson & Johnson (JNJ) reported 2015 second-quarter results July 14. Though the healthcare and consumer goods giant experienced quarterly revenue and adjusted earnings-per-share declines of 8.8% and 3.9% during the period, respectively, both numbers beat consensus estimates. Divestitures and currency headwinds weighed heavily on reported results, with currency negatively impacting revenue by 7.9%. Revenue–excluding divestitures, acquisitions, and the impact of currency exchange–advanced 1.7% in the quarter; though this wasn’t great, the modest quarterly organic increase was nowhere near the pace of the reported top-line decline. More encouraging was the firm’s profitability in the quarter. Though adjusted net earnings and adjusted diluted earnings per share declined 6.3% and 3.9%, respectively, adjusted diluted earnings per share increased … Read more

Are Corporate Credit Ratings Really Useful?

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Image Source: Simon Cunningham  There is no way… hold on, let me start over. There is absolutely no way that a company whose primary product price can fall 50% or more in a couple months is a pristine AAA-rated credit. It makes little sense. Having evaluated the credits of hundreds of companies spanning all sectors and industries, you’re never going to convince me that such a business model is worthy of a coveted AAA credit rating. Never. This week, Standard & Poor’s (MHFI) reiterated Exxon Mobil’s (XOM) AAA rating, as if the conditions that shellacked the energy markets the past 6 months simply do not apply to Exxon. Instead, the rating agency opted to lower the firm’s liquidity rating from … Read more

Johnson & Johnson Finetunes 2015 Guidance

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It’s pretty incredible if you think about it: Johnson & Johnson (JNJ) hovering around $100 per share. The company was an inaugural addition to the Dividend Growth portfolio in January 2012 in the mid-$60s, and we’re sure that many of you have been holding J&J for much longer than that. The company has been a big winner, with 2013 being an exceptionally good year. 2014 got off to a good start, but since then, share-price performance has been relatively flat, including thus far in 2015. On April 14, Johnson & Johnson released its first-quarter results for 2015. As with many global firms, the company’s performance was hurt by currency issues, but adjusted top-line results advanced more than 3%, led by … Read more

Hooray! Biogen’s Breakthrough Alzheimer’s Drug?

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We’re disappointed that we missed highlighting Biogen (BIIB) to our membership many moons ago. Biogen’s stock has more than quadrupled since we launched coverage of the company in late 2011, and frankly, its stock has done nothing but rocket higher. To be fair, Biogen is a top-10 holding in the Health Care Select Sector SPDR (XLV), a position in the Best Ideas portfolio, so we do have some exposure to the blossoming biotech, but we could have done a better job pounding the table. The once- 9-rated on the Valuentum Buying Index, Health Care Select Sector SPDR has approximately doubled since it was added to the Best Ideas portfolio, but we know that may not be good enough. The news … Read more

4 Opportunistic Stocks To Consider Buying in 2015

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The Valuentum Buying Index (VBI) is a philosophy that considers the valuation of a company and the likelihood that a company’s stock will converge to a cash-flow derived fair value estimate. The VBI accepts the view that value is based on the sum of a company’s future expected discounted free cash flows and the excess cash on its balance sheet, while acknowledging that market participants must eventually agree with a firm’s underpricing (and buy the stock) in order to drive the stock’s price to fair value. An underpriced stock with no buying support is not poised to generate good returns, nor is an overpriced stock with good momentum as it will eventually succumb to panic selling once euphoria fades. Stocks … Read more

HCV Competition Not New “News” for Gilead

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Let’s set one thing straight. On a fundamental basis, biotech firm Gilead Sciences (GILD) is performing quite well, contrary to what its recent stock price move might suggest. Prescriptions for the firm’s Harvoni and Sovaldi hepatitis-C drugs continue to track slightly ahead of projections, and we would expect a slightly stronger-than-forecast fourth-quarter report as a result. In coming periods, we look forward to positive management commentary that speaks to the strength and sustainability of the firm’s hepatitis-C franchise (about half of Gilead’s sales). Any commentary, in light of the recent uncertainty and growing competition in the hepatitis C market, will be reassuring for investors that have been anxiously pursuing tax-loss selling and profit-taking in Gilead’s shares the past few weeks. … Read more

Johnson & Johnson: Still a Solid Dividend Growth Pick

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Yesterday, a core holding in the Dividend Growth portfolio, Johnson & Johnson (JNJ), reported fantastic third-quarter results. Sales of $18.5 billion advanced more than 5% compared to the third quarter of 2013. Domestic sales leapt 11.6%, while international sales were roughly flat, off less than 1%. The results were muddied by the divestiture of its Ortho-Clinical Diagnostics business. Worldwide, domestic and international operational sales growth, adjusted for the divestiture, came in at 8.4%, 14.8% and 3.1%, respectively. Net earnings, excluding special items, were $4.3 billion and $1.50 per share in the quarter, up 9.5% and 10.3% on a year-over-year basis, respectively. These are fantastic growth rates for a company of Johnson & Johnson’s size. The biggest driver behind the company’s … Read more