Lanny’s Recent Purchase – JNJ

Mr. Market you can keep taking that downturn all you want.  As long as us Dividend Diplomats have capital and we feel there is an opportunity, we are going to try and strike, in the words of Austin Carr – throw the hammer down.  The market was on a nice decline today, came slightly back, but then took another slide in the park for us.  Let’s dive in about who, why and how much I bought of a certain stock!

Recent Purchase – Johnson & Johnson (JNJ)

Well, well, well.  JNJ is back at it again for me it looks like!  The last time I purchased them they were trading at $98.03.  Today, I saw the swings and places a limit order at $91.75, a killer 6.4% decline since then, breaking the 5% barrier and traditional rule I have.   Additionally, they have increased dividends for 52 years and are labeled as one of the dividend aristocrats, one of the reasons why I will stand behind them as a foundation stock for a dividend income investor.  Let’s update the analysis since that last purchase, which thank goodness Bert came out with why always having a watch list prepared is important

1.) Dividend Yield of approximately 3.27%, which is well above the S&P 500 of around 2.18% and also beats their 5 year average of 3.1% by 17 basis points.  This is up from 3.06% when I initially purchased them, awesome.

2.) Dividend Growth – I love this metric and their dividend growth is essentially 7% over a 5 year span, something that is phenomenal, especially coupled with an above average dividend yield.  This adds quite an impact to my forward dividend growth rate for my portfolio as a whole.

3.) The P/E ratio, based on projected (updated) EPS of $6.13 was 14.97, or below the 15 that I really like to see, well below the market as a whole and is attractive amongst their competitors; and given the stock price dropped $6.25+ since last purchase, P/E was lower as well.

4.) This leads to a payout ratio of approximately 49%, well below the 60% threshold we traditionally like, but above the 20% we look for, a lot of room for growth, but also quite a bit of earnings to grow the company internally.  I dig it.

5.) Further, I like to re-up on my position if the stock drops by 5%+ since the last time I have bought them, given no dramatic things have changed.  This just gave me even more of a headnod to grab this foundation stock.

Stock Purchase Summary

August was a busy month in buying Norfolk and EMR, hoping September can be a bang if it needs to be or whatever allows me to continue Crushing over $6,000 in projected dividend income.  I can only thank Mr. Market for taking a turn on a stock I wanted to continue and build my position in.  I deployed a total capital amount of $924.45 buying 10 shares (with commission) of JNJ and added a cool/flat $30.00 to my forward looking dividend income.  With the power of dividend reinvestment – the total dividend I receive now from my position of JNJ should reinvest at a minimum of 1 shares per year will be added, given that the dividend stays, at a minimum, stagnant and that I now own over 40 shares producing over $120 in annual income alone from JNJ – thank you guys!  Adding $30.00 to my annual goal breaks down to an extra, approximately, $2.50 per month that I will start to see the benefits of this specific purchase until the 4th quarter dividend (December).  As I said earlier, this purchase also allows me to reach closer and closer to my goals for 2015.

I now own roughly $4,000 and as a dividend foundation stock, I am VERY COOL with that.  Excited that I am seeing triple figures going forward in income from this beautiful company.   Did anyone else pull the trigger?  Making moves on the down day or staying on the sidelines watching the movement happen?  What are you looking at?  Thank you!

-Lanny

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19 thoughts on “Lanny’s Recent Purchase – JNJ

  1. Lanny:

    Congratulations on the JNJ addition! Triple digit passive income from an awesome company that is sure to grow. While not as skilled to have purchased JNJ at $91.75 I did purchase 13 shares at $95.28 after the market drop recognizing the value of the company.

    Best,
    Alex

  2. Have been adding some more dividend growers recently and just came across your superb website. I was wondering which websites you use to find out about companies that are announcing dividend increases.
    All the best
    Garry

    • Garry,

      Nice job with buing dividend growers – that’s what it’s all about! I use dividendinvestor.com – it has been a dividend bible to me! I also just read the investor news pages for the companies I own. Let me know if you have any other questions!

      -Lanny

  3. Awesome buy Lanny. We will have tons of opportunities in the coming months so get read bud. Christmas shopping is approaching. Winter is Coming… 🙂 LOL.
    Thanks for sharing and happy for your purchase. JNJ is a stock I will build up more in the future as well.
    Take care my friend. Keep up the good fight.

    • Hustler,

      Thank you sir! We will have many opps coming up and the sale is on! Loving it.

      JNJ is just one of those companies, where if it drops – swoop in and pick them up when you can. Love that company.

      Thanks again Hustler, get that winter jacket, I have a feeling it’ll be a long one.

      -Lanny

  4. Nicole purchase. Unfortunately I put my limit order in at 91.00 even and it still hasn’t hit that low yet. Hoping it hits that soon so I can join you as an owner!

  5. JNJ at really great price. Gotta love it for sure. I can always trust their market domination on many of their products and can’t wait to buy them when they are still cheap. All I need is available cash at this time. 🙁
    Thanks for sharing! Cheers!

    BSR

    • BSR,

      You have to love it – foundation stock that we write about all of the time. Cash is always hard to come by when there is an opp. I hope you find that capital and are able to scoop them up — it’ll happen! Thanks again for coming by.

      -Lanny

  6. Lanny – You really can’t go wrong buying a Dividend Champion like JNJ in the low 90’s (a roughly 17% discount from it’s 52-week high). With over 50-plus years of dividend growth, I think it’s pretty safe to say these $30 in forward dividends is something you can depend on for years to come. Way to continue adding value to the portfolio. Keep up the great work!

    Best wishes and continued success! AFFJ

    • AFFJ,

      Well… trying to catch up to the big moves you are making!! I love their dividend growth and love the forward growing income it will be producing.

      Best of luck to you as well, keep killing it over there!

      -Lanny

  7. Great buy right there. I had been eyeing this stock and would have purchased more if I didn’t already hold a largish amount. The price is spot on, just a great long term value on a trusted brand. Good job and thanks for sharing.

    – HMB

    • MoneyBags,

      Thank you VERY much. Long term, great dividend aristocrat, foundation company, building blocks no matter what time. I like my position in here now, but it’s hard to pass up on these levels… If SOMEHOW they drop another $5 per share… temptation may kick in!

      -Lanny

  8. First off, fantastic portfolios guys! 140k invested in your 20’s talk about skill & discipline. I too have JNJ on my radar and I hope to have an opportunity to buy in somewhere in the mid to high 80s. I am also looking at initiating a position on IBM. I am leaning towards JNJ just because I think they are more stable in the long run, but I feel IBM might provide a better value at this point. Any thoughts?

    Andrew
    SHM

    • Andrew,

      Thanks for the compliments – much appreciated! IBM is incredible as well – I try to tune out the noise on negativity on them – they are in the 140s, something never seen in quite some time, have the most impressive dividend growth rate history in terms of % growth (18% this year!) and also have a great share buy back program that keeps the share price, earnings per share, yield and payout in check! I say try to split your capital and get both if you can. Thoughts?

      -Lanny

      • Well I like to buy in blocks of 25 or 50 when I can afford to… I am not sure if its OCD or just my desire not to pay too much in fees. I figure my diversification will work its self out over time. If I had lets say $3600 hundred to invest instead of me buying 10 IBM and 23 of JNJ and getting hit with trading fees twice I would rather invest the 3600.00 into 25 IBM and not get hit with two transaction fees. In this quest for freedom every dollar counts so I don’t want to give any away. not sure how sound my logic is here :-). Yes I do like the buyback program of IBM and esp with the stock going down they will be able to take way more shares off the market then previously anticipated. I am hopefully going to snag some this week or next, ill be sure to let you guys know!

        Andrew
        SHM

  9. Lanny,

    Great buy with JNJ. I picked them up in the low $60s back a few years ago when seemingly everyone “hated” them. Since then, I’ve had the company on autopilot in my portfolio and recently have been getting interested again on the current price weakness.
    You gotta love JNJ well above 3% on yield.

    Take care!
    – Ryan from GRB

    • GRB,

      Thanks for the post – and smooth getting them that low! You’re right, that must have been a few years ago as well. I bet you have been loving their consistent dividend increases and collecting those checks along the ways. Let us know if you end up scooping them up! I see you guys were on a tear last week, nice.

      -Lanny

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