Is JNJ Getting To A By Point?
- Posted by ToddSullivan
- on July 25th, 2012
I find it interesting that BV/Share and the dividend have grown at the same rate for the past decade
$JNJ was over-priced in 2002, but today it finally looks worthwhile. Market psychology took ~10yrs to washout to get to this level as one can see from the Pr/BV trend in the chart.
Here is my analysis on $JNJ. You have 2 return streams, 1) %Div and 2) Gwth Rate of BV/Shr. For JNJ the BV/Shr Gwth has been 11% since 2002, but what you receive depends on the Pr/BV ratio at which you buy it.
In 2002 $JNJ was priced at 7x BV and the 11% BV Grwth Rate becomes 1.57% while the DIV was 1.54% for a total return of just over 3%. The stock did has not had great performance since 2002 as the Pr/BV dropped to the recent just below 3x BV even though the growth was quite steady.
At 3x BV you get 3.67% BV Growth and today you get 3.6% DIV for a total 7.25%+. This is good today in a 4.9% Prevailing Rate climate. $JNJ has grown its dividends at the same pace as its BV/Shr the past 10yrs.
I would buy JNJ in today’s market.
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Todd's investing strategy is essentially long with the rare short. He seeks to buy undervalued issues with an upcoming catalyst that will help them realized.... More »
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