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Review of Johnson & Johnson (Public, NYSE:JNJ) - Dividend Paying Aristocrat Stock
(June 27, 2010)
Today we will review Johnson & Johnson (Public, NYSE:JNJ) stock which is one of the dividend paying aristocrat stocks listed on the S&P 500 Dividend Aristocrats list. The company was founded almost 120 years ago on a revolutionary idea: Doctors and nurses should use sterile sutures, dressings and bandages to treat peoples’ wounds. Now, the company doesn't just manufacture bandages, it has grown to a large pharmaceutical giant that manufactures medical devices, consumer health products and pharmaceutical medicines. The company has been paying dividends for the last 47 years, and has steadily increased its dividend in the past 25 consecutive years; this is why it is featured in the S&P 500 Dividend Aristocrats list.
As of the market close on June 24, 2010, JNJ has a dividend yield of 3.68% paying $0.54 cents per share dividend quarterly. The company is trading at 12.33 price to earnings ratio which means you would be paying 12.33 cents for every 1 cent that the company earns in net income. The company has 2.67 billion outstanding shares trading in the stock market, thus making it very liquid and has a market capitalization of almost $162 billion! Apart from paying dividends which increases investor cash flows, the company has delivered a 30.81% total return in the past 10 years, averaging 3.081% return every year.
For the balance sheet ended March 1st, 2010, Johnson & Johnson has $15.810 billion dollars in cash and another 3.615 billion in short term investments. Their total current assets equal $39,541 billion versus total current liabilities equaling $21,731 billion. When you calculate their current ratio, it is:
This shows the strong liquidity of this company, it has $1.82 of cash for every $1 in liability. This is one of the factors that the greatest value investor in the world, Warren Buffet looks at when examining what companies to buy and hold. Where does the company use its cash? From the company's 2009 annual investor report, we find:
"The major uses of cash were capital spending of $2.4 billion, acquisitions of $2.5 billion, net investment purchases of $2.8 billion, dividends to shareholders of $5.3 billion and the repurchase of common stock, net of proceeds from the exercise of options, of $1.2 billion."
From this statement, we can see how shareholder friendly this company has; it has dedicated the largest portion of its cash earnings to paying dividends to its shareholders ($5.3 billion).
The Company increased its dividend in 2009 for the 47th consecutive year. Cash dividends paid were $1.930 per share in 2009, compared with dividends of $1.795 per share in 2008 and $1.620 per share in 2007. The dividends were distributed as follows:
Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the health care field. The Company operates in three business segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. In July 2009, Johnson & Johnson completed the acquisition of Cougar Biotechnology, Inc. with approximately 95.9% interest in Cougar Biotechnology's outstanding common stock. In September 2009, Elan Corporation, plc and Johnson & Johnson announced that JANSSEN Alzheimer Immunotherapy, a newly formed subsidiary of Johnson & Johnson, has completed the acquisition of substantially all of the assets and rights of Elan related to its Alzheimer`s Immunotherapy Program (AIP). In March 2010, Hypermarcas SA acquired 99.99% of Versoix Participacoes Ltda from the Company.
> Number of Employees: 115,500 over 175 countries