I Bought More Shares Of This Healthcare Giant:
The overall market continues to keep us guessing with wild price swings this month. But what’s new? We can never predict where prices are going in the short term. However, history tells us that in the much longer term, prices will eventually move along with earnings. So as an investor, it’s wonderful that the stock market is full of individual companies with their own unique profitability, fundamentals, and valuations to choose from. My mission is to invest in businesses that have a history of earnings growth, annual dividend increases, and are trading at attractive valuations. One day I’ll pay all of my expenses with the income these growing dividends generate.
Today I couldn’t resist averaging down on my position in healthcare giant Johnson & Johnson (JNJ). I initiated a position in this company just a few months ago in July at $101.59 a share. This afternoon, I purchased 16 shares for $96.90 and a $6.95 commission for a total cost of $1557.35. I got in at a lower price by 4.62%. Typically I’d like to see a position decline further before adding, but with JNJ I’ll sleep better at night with each extra share I accumulate. My per share cost basis of $101.99 decreases to $99.81, and I got in with a trailing P/E just shy of 18 and a forward P/E just over 15. This purchase also adds $44.80 to my forward dividends for a new 12-month total of $1,164.96.
Johnson & Johnson has had 51 years of consecutive dividend increases and is still easily growing them today at about 7% a year on average these past 5 years. Why the price volatility? It’s hard to say. The company posted its earnings report today and topped expectations, even increasing full year guidance for the third time this year. This quarter last year, JNJ reported earnings of $1.04 a share compared to $1.66 reported today. The better than expected earnings were boosted by pharmaceutical sales of a new Hepatitis C drug, but this boost isn’t expected to last as competition has seemingly developed a better solution. In my opinion, this sort of current news has little to do with the long term story, and I want more shares. Keep falling JNJ, and I’ll keep buying.
Here are some recent fast graphs using my current JNJ position value of $3,310.09 without dividend reinvestment:
What do you think about JNJ? Could you ever own enough?