Johnson & Johnson: Another 2022 Safety Bet

seekingalpha2021-12-24

Summary JNJ has undoubtedly underperformed the market in 2021. 60th consecutive dividend increase on the cards in 2022. Rotation to value should help the stock along with spin off progress. Johnson ...

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Comments

Chigolas
2021-12-25
Chigolas
Nice
Annalz
2021-12-25
Annalz
Add oil JNJ
CYK1955
2021-12-24
CYK1955
Ok
FunnyFun
2021-12-24
FunnyFun
LIKE
Dzzh83
2021-12-24
Dzzh83
Let’s do it!
XiaTian
2021-12-24
XiaTian
Ohs

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nJohnson & Johnson: Another 2022 Safety Bet\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-12-24 16:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4476608-johnson-and-johnson-another-2022-safety-bet><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nJNJ has undoubtedly underperformed the market in 2021.\n60th consecutive dividend increase on the cards in 2022.\nRotation to value should help the stock along with spin off progress.\n\nJohnson ...</p>\n\n<a href=\"https://seekingalpha.com/article/4476608-johnson-and-johnson-another-2022-safety-bet\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"JNJ","symbol_name":"强生","start_time":0,"source_url":"https://seekingalpha.com/article/4476608-johnson-and-johnson-another-2022-safety-bet","article_id":"1173415382","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1173415382","pubTimestamp":1640332896,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Summary\n\nJNJ has undoubtedly underperformed the market in 2021.\n60th consecutive dividend increase o","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"JNJ":"强生"},"translate_title":"强生：另一个2022年的安全赌注","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"JNJ":0.9},"content_text":"Summary\n\nJNJ has undoubtedly underperformed the market in 2021.\n60th consecutive dividend increase on the cards in 2022.\nRotation to value should help the stock along with spin off progress.\n\nJohnson & Johnson (JNJ) needs no introduction but the stock could certainly use some love. The stock has gained about 8% (excluding dividends) while the S&P 500 has gained more than thrice that at 25%. So, what went wrong? Well, from the bigger picture, nothing. But let's still look at a few hindsight reasons.\nCOVID Vaccine Lag\nIn spite of its single shot vaccine, JNJ has clearly taken the backseat in the COVID vaccine fight. Pfizer(NYSE:PFE)and Moderna (MRNA) have been the biggest winners among big names.Reportsabout blood clots and adverse reactions did not help its cause almost immediately after the launch. The company did itself no favor with its own manufacturing and wastage problems as well. Despite that, JNJ did beat earnings estimate by an average of 8% over the last 4 quarters.\n(Source:Seeking Alpha)\nMarket Conditions\nA large part of JNJ's relative underperformance has to do with the alternatives. With the Fed's money printing policy and stimulus, investors (wondering if that is the right word here) were looking for riskier bets with higher pay offs. Earnings didn't matter. Dividends didn't matter. Hype mattered. Memes mattered. However, as we stated in our recent article on Altria, fundamentals don't matter until they do.\nNow, let's look at the things investors can look forward to in 2022.\nSpin-Off Progress\nJNJ recently announced that it plans to spin off its consumer products into a separate business. While the spin off is expected to take 18 to 24 months, it is highly likely that the company will be providing meaningful updates towards the goal. We found the CFO Joseph Wolk's quote in the article linked above interesting. The company believes the consumer division is not getting the spotlight it deserves, suppressing the overall valuation.\nSpin-offs may bring some bad memories but some recent spin-offs in Healthcare have not been terribly bad in the overall context. AbbVie (ABBV) has been a strong performer and let's not forget that it was a spin off from Abbott (ABT) in 2013.\nPfizer's stock has seen a tremendous appreciation thanks to COVID vaccines and pills, while its spin-off Viatris (VTRS) has been much slower. This comparison augurs well for investors' sense since JNJ's pharmaceutical and medical devices division, which make up 85% of the company's earnings, will retain the company's current name. This is not to put down JNJ's consumer health group that has many well-known products like Band-Aid and Baby Powder.\nMarket Rotation\nThe last few weeks have been interesting to say the least. Omicron, Fed, Interest Rates, and Inflation have combined together to cause some wild swings in both directions. However, one cannot deny that value and safety names are getting a bid. And not many names are safer than JNJ. In terms of valuation, the stock is trading at a forward earnings multiple of 16 based on 2022 earnings estimate.\n(Source:Seeking Alpha)\nDividend Growth\nGoing by the company'strack record, investors can be assured of a dividend increase in April, which would mark their60thconsecutive dividend increase. Let that sink in for a minute. In a market where companies that IPOd in the last decade or less is all the rage, JNJ has been around for135years. Even more impressive is the company's dividend growth streak is five years from entering the senior citizen category.\nJNJ's dividend growth rate has been between 5% and 6% the last few years. The table below shows the expected yield on cost assuming a 5% annual dividend increase. Yield on cost is not a popular metric but we use it to get an initial assessment of the safety net.\n4% yield 10 yrs from now may not look earth shattering right now but as we've mentioned in many of our past articles, dividend stalwarts tend to have a base yield that the market associate them with. For example, Coca-Cola's (KO) yield at any point has very rarely been above 3.50% in spite of the company's dividend growth pedigree. This is because investors (retail and funds) bid up the stock price over time to catch up with the dividend increases. This gets more pronounced during sell offs like the first COVID sell off in 2020.\n(Source: Table compiled by author with current dividend data from Seeking Alpha)\nPedigree\nA 2016studyfound that the average life span of companies in S&P 500 has gone down 70% from 61 years to 18 years. Here is a powerful quote from the study to let the 60 and 135 years from above sink in:\n\n\"A recent study by McKinsey found that the average life-span of companies listed in Standard & Poor's 500 was 61 years in 1958. Today, it is less than 18 years. McKinsey believes that, in 2027, 75% of the companies currently quoted on the S&P 500 will have disappeared.\"\n\nIn other words, JNJ is a reliable pillar around which any sort of portfolio can be built. Refer this article for the house analogy that helps us through tough times for some of our core holdings.\nConclusion\nThe relative underperformance of JNJ in 2021 should not deter investors from owning this stock. We continue reinvesting our dividends into JNJ and plan to add on pullbacks. The safety net provided by this stock compensates for years like 2021 where it underperforms relatively.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9009923131,"gmtCreate":1640446645074,"gmtModify":1676533521413,"author":{"id":"3575377810506679","authorId":"3575377810506679","name":"Chigolas","avatar":"https://static.tigerbbs.com/4ef6062aba27bb0f929bcd7a54b6a2c5","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9009923131","repostId":1173415382,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9009081989,"gmtCreate":1640362968112,"gmtModify":1676533518198,"author":{"id":"3577089953267281","authorId":"3577089953267281","name":"Annalz","avatar":"https://static.tigerbbs.com/ffd285ab6189bb61da4b48c3e149eedc","vip":1,"crmLevel":3,"crmLevelSwitch":0},"htmlText":"Add oil JNJ","listText":"Add oil JNJ","text":"Add oil JNJ","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9009081989","repostId":1173415382,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9009001690,"gmtCreate":1640337167119,"gmtModify":1676533517169,"author":{"id":"4088680907294400","authorId":"4088680907294400","name":"CYK1955","avatar":"https://static.tigerbbs.com/679672f252a501703bd797c51e7c8b67","vip":1,"crmLevel":1,"crmLevelSwitch":0},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9009001690","repostId":1173415382,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9000777563,"gmtCreate":1640335011575,"gmtModify":1676533517071,"author":{"id":"3581664026895626","authorId":"3581664026895626","name":"FunnyFun","avatar":"https://static.tigerbbs.com/e07aca58746125ec6ef6115042d363e9","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"LIKE","listText":"LIKE","text":"LIKE","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9000777563","repostId":1173415382,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9000774339,"gmtCreate":1640334067169,"gmtModify":1676533517039,"author":{"id":"3581508813289626","authorId":"3581508813289626","name":"Dzzh83","avatar":"https://static.tigerbbs.com/116486e053d8dc5930bbead2bdb71915","vip":1,"crmLevel":1,"crmLevelSwitch":0},"htmlText":"Let’s do it!","listText":"Let’s do it!","text":"Let’s do it!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9000774339","repostId":1173415382,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9000775611,"gmtCreate":1640333642896,"gmtModify":1676533517023,"author":{"id":"3575368380492738","authorId":"3575368380492738","name":"XiaTian","avatar":"https://community-static.tradeup.com/news/71777f1a5ae276e73064272b5ae7df92","vip":1,"crmLevel":3,"crmLevelSwitch":1},"htmlText":"Ohs&nbsp;","listText":"Ohs&nbsp;","text":"Ohs","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9000775611","repostId":1173415382,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":82,"commentSize":6,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1173415382"}