Johnson & Johnson (NYSE
Johnson & Johnson stock is the granddaddy of health care stocks, as the company’s history dates back to the late 1800s. JNJ stock falls into the defensive category due to the company’s involvement in the production and sale of healthcare products, medical devices and pharmaceuticals, which generally retain their value and demand during economic downturns.
Main Takeaway: Buying Johnson & Johnson Stock
- Select a broker. Depending on your experience, pick a broker that gives you the tools you need to trade. If you’re just beginning to invest, look for a broker with educational resources.
- Practice with a demo account. Before risking your own money, try trading with your broker’s demo account. This allows you to practice before using your own funds.
- Fund and buy JNJ. Once you’re confident in your stock choices, you can fund your brokerage account and purchase the stock.
JNJ: Company and Stock History
New Brunswick, New Jersey-based Johnson & Johnson was founded in 1886 by 3 brothers: Robert, James and Edward Johnson, who had been working in a medical products business and decided to go out on their own.
One of the company’s early innovations was the first commercial first-aid kit, introduced in 1888. The company began its expansion in the 1920s, opening offices in the U.K. and Canada and continued growing by purchasing other companies involved in health care products, such as Janssen Pharmaceuticals and Janssen Biotech, DePuy, Ethicon
The company’s 3 major divisions include pharmaceutical, consumer and medical devices and diagnostics. The firm’s pharmaceutical division provides a wide array of medical products for the treatment of infections, as well as for other medical purposes, including contraception, oncology, neurology, immunology, hematology, dermatology, pain management
Johnson & Johnson’s consumer division sells products for oral care, skin care, baby care
In 1944, Johnson & Johnson went public in an initial public offering (IPO) at $37.50 per share on the New York Stock Exchange (NYSE) under the symbol JNJ. After adjusting for splits and dividends, JNJ stock was trading under $1 per share in June of 1970 and by February of 1990, the stock had reached $6.70 per share. JNJ stock then increased to $52.40 by October of 1999.
JNJ stock then traded between $50 and $70 per share until December of 2012. The stock has since gained consistently after breaking out of that particular range and currently trades at $141.85 per share.
Future Outlook for JNJ
After declining notably from $72 to $46 per share during the 2008-2009 global financial crisis, JNJ stock has since traded higher overall along with the U.S. stock market in general. The stock has also had six stock splits since its IPO. Two of them were 3 to 1, while 4 of the splits were 2 to 1, with the last split taking place on June 13, 2001.
Johnson & Johnson has had 56 consecutive years of dividend payment and growth. This impressive track record of providing its investors with income makes the company both a “dividend aristocrat” due to having at least 25 years of consecutive dividend increases, as well as a “dividend king” by having a minimum of 50 years of dividend growth.
Just 25 other companies in the entire S&P 500 group qualify for that prestigious dividend king title. The current trailing 12 month (TTM) dividend payout for JNJ is $3.80, which implies a dividend yield of 2.68% at the stock’s current price of $141.85.
Johnson & Johnson remains 1 of only 2 U.S. corporations to retain a AAA credit rating from Standard & Poor’s Corp. (S&P) in the wake of the 2008 financial crisis and Exxon Mobile’s downgrade in 2016.
This means that these two firms’ top credit rating even beats out that of the U.S. government, which only has an AA+ rating, as well as all other corporations based in the United States. The company’s impressive dividend history and stellar credit rating attest to the efficiency and profitability of its business model and makes JNJ stock a top investment for dividend income.
As far as capital appreciation is concerned, JNJ stock has rallied overall with the stock market, but it has recently consolidated within a triangular pattern since peaking at $147.36 on January 19, 2018, and falling to $121.26 on June 1, 2018. The mostly sideways trading seen in JNJ stock over the last year and a half suggests that investors have now priced the stock at a relatively fair value around the center point of that pattern and see little fundamental reason to take it either higher or lower.
Although a triangle pattern can break out in either direction, it does mean that price gains from current levels might be limited near term, especially with the risk of a possible economic downturn looming.
You might want to wait for a decline in the stock ahead of your purchase, even if that just means waiting until it makes another move lower within its existing triangular consolidation pattern. Buying JNJ stock at a lower price would increase its dividend yield, which would make it a more suitable long-term investment for the income-minded investor.
Why You Might Want to Buy It
Here are a few highlights as to why JNJ might be a good buy for you.
JNJ stock’s status as an S&P Dividend King makes the stock particularly attractive to investors who concentrate on dividend income and yield. The company is also the only one with a Dividend King ranking in the healthcare sector of the U.S. economy.
Defensive in an economic downturn
JNJ stock can retain a good part of its value during economic downturns, making it a defensive investment, given the significant potential for future weakness in the U.S. economy. In addition, the company’s dividend yield, which increases as the stock’s price falls, would tend to create demand for the popular and top-rated stock, thereby usually mitigating its losses overall.
JNJ stock has seen its earnings per share (EPS) increase consistently over the last 10 years. While this trend could reverse, some analysts expect its EPS to continue to increase by 6% per year through 2024.
Considerations Before You Buy
Before you add JNJ to your portfolio, make sure to consider these points.
Stock market/economic downturn
In a severe economic downturn, even defensive stocks like JNJ can lose some of their value. Worsening employment numbers and reduced expendable income can reduce demand for Johnson & Johnson’s products and services. This causes slowing revenue that would adversely impact the company’s earnings per share and, ultimately, its stock price and possibly its dividend payments.
Stock near historical highs
The all-time high for JNJ stock is $147.36 per share, which is only just over 4% higher than its current share price of $140.69 per share. The high price of JNJ shares reduces its dividend yield and the chances for future capital appreciation when investing in it.
The number of lawsuits pending against Johnson & Johnson has grown over the years, and it exceeded 100,000 as of 2018. The lawsuits have been filed for many products made by the company.
It also includes defects in its medical devices, side effects in pharmaceuticals such as Risperdal, which accounts for over 18,500 lawsuits and more than 24,000 lawsuits for a vaginal pelvic mesh product that caused erosion, infection, recurring incontinence and urinary problems in women.
As a further example of the risk involved, in July 2018, the company was required to pay 22 women and their families $4.69 billion in claims due to the presence of carcinogenic asbestos in Johnson & Johnson’s talcum powder that they believe led to their development of ovarian cancer.
Payouts for multiple lawsuits like this could adversely affect earnings, dividends, and eventually, JNJ’s stock price.
How You Can Buy Johnson & Johnson Stock Right Now
You can buy Johnson & Johnson stock right now if you have a funded account with a reputable stockbroker with access to trade stocks listed on the NYSE. If you plan to buy JNJ stock for dividend income and long term capital appreciation, you might want to consider buying your stock through a discount broker. While you might not get access to in-depth research and other extras offered at full-service brokers, you would pay a smaller commission.
Keep in mind that how you buy Johnson & Johnson stock is just as important as where you trade, so make sure you pick the right broker.
Step #1: Pick a Broker
Your needs take priority when choosing a broker, so knowing what your needs are for a broker would make your choice easier. For example, if you have limited market experience and need educational resources and an easy to use trading platform, you might consider TD Ameritrade or E*TRADE.
If you have a lot of trading experience and need an advanced trade execution platform, you would probably be more comfortable with a broker like Interactive Brokers, so just remember that some brokers will be able to meet your needs better than others. Check out Benzinga’s guide on how to choose a broker for more information.
|Broker||Best For||Commissions||Account Minimum||Choose your platform|
Get started securely through Webull’s website
1 Minute Review
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit. Webull is widely considered one of the best Robinhood alternatives.
||$6.95 for fewer than 30 trades/quarter.||$0||
Get started securely through eTrade’s website
1 Minute Review
E-Trade is best known for its user-friendly browser, desktop and mobile trading platforms and its extensive research and educational information. E-Trade may not have the lowest commissions compared to discount online brokers, but customers certainly get their money’s worth from E-Trade’s comprehensive offerings.
60 days of commission-free trades with deposit of $10,000 or more
Get started securely through TD Ameritrade’s website
1 Minute Review
This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.
Trade commission–free for 90 days & get up to $2500
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Get started securely through Ally Investment’s website
1 Minute Review
If investors are on the hunt for a bargain broker, Ally Invest could be the one. With low commissions across the board, Ally Invest (formerly TradeKing) stops potential investors in their tracks with its especially low mutual fund commissions. Commissions on stocks and ETFs are notoriously inexpensive as well, and for more active traders or those with larger account balances, commissions can dip as low as $3.95 per trade.
$3.95 per stock trade for Active Traders at Ally Invest
Step #2: Use Demo Accounts to Try Different Brokers’ Trading Platforms
Demo accounts are practice trading accounts that let you trade risk-free with virtual money. Widely offered by online brokers, these accounts can be opened to assess a broker’s trading platform and to practice trading.
You can also open more than one account with different brokers, so doing this would probably give you an idea of which broker best suits your needs and preferences when it comes to their trading platform.
Step #3: Fund a Trading Account
After you’ve familiarized yourself with a broker’s trading platform and feel comfortable with their service and commissions, you’re ready to fund an account. Many brokers let you open accounts free of charge, but if you want to buy JNJ stock, you’ll need to have money in a trading account before doing so.
Make sure you check with your preferred broker on their requirements for opening an account, since each broker has their own initial deposit minimums and funding methods, although most brokers will take debit cards and bank transfers for deposits.
Step #4: Buy JNJ Stock
Once your account is funded, you might want to watch JNJ stock for a session to see how the stock trades and to pick the optimum buying price. You can then place a good til canceled (GTC) limit order at your preferred price level and for the amount of stock you wish to buy. You can also just buy the stock you want at the prevailing market price by putting in a market order.
Is JNJ Stock for You?
JNJ stock has been a stellar long-term investment for many patient individual investors and institutions. The stock pays a dividend which has increased every year for 56 years, an achievement that very few companies have ever replicated. This dividend provides yearly income for investors that exceeds the return of a U.S. Treasury Note.
The company also has a AAA S&P rating, which also beats the T-note since the U.S. government currently only has an AA+ rating.
Though your investment in JNJ stock may not immediately provide substantial capital appreciation due to a likely economic downturn affecting the overall stock market, the company has proven that an investment in JNJ stock has a strong likelihood of providing a substantial capital return over the long term, in addition to reliable income from dividends.