In yesterday's Stock Analysis on JNJ, I stated that for some time now, I have been looking for an entry point to purchase JNJ. The overall rating of two Stars has not changed since my first review on 11-21-2007. However, many of the metrics I look at have changed and here's a break-down the differences between now and then:
02-11-2008: $62.03 (Good!)
02-11-2008: 17.3 (Good!)
02-11-2008: 2.64% (Good!)
Avg. P/E Price:
02-11-2008: Favaorable (Good!)
Years to MMA:
02-11-2008: 11 (still one more than I prefer as a maximum, by 1 year)
NPV MMA Diff:
02-11-2008: $2,517 (More than 5 times the November 21st amount)
Since new dividend data was available, I used my model D4L-PreScreen.xls to update some of the above analysis. I input the following data:
Current Yield: 2.64%
Calc. Div. Growth: 11.0%
MMA Yield: 4.86%
Max Div. Growth: 20.0%
Override Div. Gro: 0.0%
2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
1.62 1.46 1.28 1.10 0.93 0.80 0.70 0.62 0.55 0.49 0.43
The calculated NPV MMA Diff only changed slightly. I determined that it would take a dividend growth rate of 11.7% to get the Years to MMA down to 10 (the maximum I like to see). Since I use a conservative method of estimating the dividend growth rate, a 11.7% is not unrealistic given the 11-year average is 14.0%. Using the Override Div. Gro. field I entered 14.0% to see what that did to the NPV MMA Diff - it increased to $8,132. I entered 5,000 in cell C25 then pressed the button in D12 to backsolved for the growth rate needed to give me a NPV MMA Diff of $5,000. It was 12.6% which is not unreasonable.
My conclusion: Buy. Like General Electric Company (GE), JNJ is one of those boring predictable companies that finds its way into most every dividend investor's portfolio. JNJ is a well-managed, well-run company and has been that way for decades. I like owning companies like JNJ and GE because it offsets some of my more riskier investments, but I will not buy in at just any price. I purchased a small block of JNJ and will continue to watch it for opportunities to add to my position.
Full Disclosure: At the time of this writing, I proudly own shares of JNJ.
Tomorrow: What did I sell to buy JNJ and why?
Popular Posts - Last 7 days
The S&P 500 Dividend Aristocrats is the most recognized list of dividend stocks. The Dividend Aristocrats index is designed to measure ...
Linked here is a detailed quantitative analysis of Chevron Corporation (CVX). Below are some highlights from the above linked analysis: C...
Each Sunday I highlight any notable articles that I came across over the past week. Though I may not always agree with each of the articles ...
In the U.S. and Canada, most companies pay dividends quarterly . In other parts of the world, it is not uncommon for companies to pay an ann...
Presented below are my dividend stock and ETF/CEF holdings. This is not a recommendation to buy these securities. I have classified some of...
Any master architect will tell you the key to a quality structure is its foundation. Solid buildings have firm foundations. The more solid t...
Today is Thanksgiving in the U.S. On this day most Americans reflect on all that they have been blessed with and give thanks for it. As an i...
Linked here is a detailed quantitative analysis of Abbott Laboratories (ABT). Below are some highlights from the above linked analysis: C...
Monday, October 31, 2011 will mark my fourth full year of writing as Dividends4Life . It is hard to believe another year has passed. Like th...
Linked here is a detailed quantitative analysis of Realty Income Corp. (O). Below are some highlights from the above linked analysis: Com...