Johnson and Johnson

On my other blog I am today writing about Money Show 2015 and the Rehman Moledina learn more. He has an extremely negative attitude about small investors. Yet I, as a small investor have consistently made money in the market since the late 1970's.

Sound bite for Twitter and StockTwits is: Dividend growth US stock. Although I still cover a number of US stocks, I am not ready at present to buy any. See my spreadsheet on Johnson and Johnson.

I do not own this stock of Johnson and Johnson (NYSE-JNJ). As Canadians, we are told we should be buying US stocks for our portfolio. It is often recommended that we have at least 25% of our portfolio in US stocks. I have never followed this, although I have tried dipping into the US market, but I have never made any money there. I bought some of this stock in June 2005 and realized a year later, in June of 2006 that it was going nowhere for me and sold. I lost almost 17% of my investment. When I bought in 2005, all the analysts were saying that it was a good buy at that time.

The Americans statements have a lot more information that Canadian ones do. However, sometimes more information is just more information. It does not mean you get better information. I am rather focused on the information I want. I find with the US 10-K statements there is just a lot more carp to go through to find what I want.

I have been tracking for this stock total return for 5 year periods from 2002 to the present. What gets me as a Canadian investor in such a stock is that for the 5 year periods from 2003 to 2012 I would have had either a negative or extremely small total return. I know a lot of Canadians invest in US stocks. However, I never had much luck investing in US Stocks.

I held US stocks of Gillette (NYSE-G), Johnson and Johnson (NYSE-JNJ) and WorldCom Inc. (NYSE-WCOM) and made no money on any of them and lost big time on WorldCom. I did better holding international stock via ADRs of Barclays PLC (NYSE-BCS), Cable and Wireless (NYSE-HKT) and Nokia NYSE-NOK). I made a profit on all with Cable and Wireless a very good investment.

The problem, of course, of investing in foreign stocks is that you never know what you will receive in dividends. For ADRs it is even more confusing as dividends are translated into US$ before being translated in CDN$.

For Canadians, the dividends JNJ have increased by 9.6% and 9.3% per year over the past 5 and 10 years. Also, total return to date over the past 5 and 10 years is at 20.60% and 9.41% per year. The portion of this total return attributed to dividends is 3.38% and 2.48% per year. . The portion of this total return attributed to capital gain is 17.22% and 6.94% per year. The US$ compared to the CDN$ is up by 6% and 1.4% per year over the past 5 and 10 years.

For Americans, the dividends have increased by 7.4% and 9.7% per year over the past 5 and 10 years. The total return to date over the past 5 and 10 years is at 14.01% and 8.27% per year. The portion of this total return attributed to dividends is 3.41% and 2.79% per year. The portion of this total return attributed to capital gain is 10.59% and 5.48% per year.

The outstanding shares have increased by 0.2% and decreased by 0.6% per year over the past 5 and 10 years. Shares have increased due to Stock Options and Share Issues and they have decreased due to Buy Backs. Revenue has grown moderately well over the past 5 and 10 years. EPS and Cash Flow has also grown moderately well.

Revenue is up by 3.7% and 4.6% per year over the past 5 and 10 years. Revenue per Share is up by 3.6% and 5.3% per year over the past 5 and 10 years. Analysts expect Revenue to decline by 5.6% in 2015. If you compared the 12 month period to the end of 2014 to the 12 month period to the end of the third quarter, Revenue is down by 5.1%.

EPS is up by 5.3% and 7.2% per year over the past 5 and 10 years. Analysts expect EPS to decline by 1.2% in 2015. If you compared the 12 month period to the end of 2014 to the 12 month period to the end of the third quarter, EPS is down by 8.4%.

Cash Flow has grown by 5.1% and 6.8% per year over the past 5 and 10 years. CFPS is up by 4.9% and 7.5% per year over the past 5 and 10 years. Analysts expect Cash Flow to decline by 2% in 2015. If you compared the 12 month period to the end of 2014 to the 12 month period to the end of the third quarter, Cash Flow is up by 0.5%.

The Return on Equity has been greater than 10% each of the past 10 years. The ROE for 2014 is 23.4% and the 5 year median is 18.7%. For 2014 the ROE for comprehensive income is just 12.1%. This suggests that earnings may not be of good quality. The 5 year median ROE on comprehensive income is closer to the ROE on Net Income being at 16.5%. The lower ROE on comprehensive income strikes a cautionary note.

The debt ratios are good and the balance sheet is strong. The Liquidity Ratio for 2014 was 2.36. The Debt Ratio was 2.14. Leverage and Debt/Equity Ratios were 1.88 and 0.88.

This is the first of two parts. The second part will be posted on Thursday, November 26, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. The company's worldwide business is divided into three segments: Consumer; Pharmaceutical; and Professional. Its web site is here Johnson and Johnson.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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