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Stocks Increasing Dividends to Buy Now

As the earnings season continues to look good, many dividend stalwarts are increasing their annual dividend payouts.  There are many companies increasing dividends but not all are stocks to buy.  I  used the equity summary score, a consensus of financial analysts at different firms, to determine that these stocks are rated Bullish or better.  For investors seeking dividend income, these stocks make great additions to your portfolio.

Coach (COH) dressed up shareholders with a 33% increase in its quarterly payout to 40 cents per share.  The new dividend will start being paid in July. The new dividend yield is 2.16%.  The luxury handbag, accessories and leather-goods maker has seen its profit grow for over two years on the strength of its North American direct-to-consumer businesses and global expansion. The company also is broadening its men’s business with more male-oriented products and by opening men’s stores in the U.S. and Japan.  COH has an equity summary score of 9.7 out of 10 for a Very Bullish outlook.

International Business Machines (IBM) reprogrammed its dividend with a 13% increase to 85 cents per share. The new payout will be coded on June 9 to shareholders of record as of May 10. The new dividend yield is 1.64%. This is the 17th straight year that IBM has increased its quarterly dividend, and the ninth year in a row of double-digit-percent increases.  IBM also authorized an additional$7 billion to buy back shares as the company looks to return more of its rising cash levels to shareholders.  IBM has an equity summary score of 9.7 out of 10 for a Very Bullish outlook.

Exxon Mobil (XOM) delivered a 21.2% boost in its quarterly dividend payment to 57 cents per share. The new payout will be made on June 11 to shareholders of record as of May 14. The new dividend yield is 2.65%. If Exxon Mobil’s CEO stays true to his word…and keeps the yield competitive, there should be further dividend increases before next year.  The company has increased its annual dividend every year for the past 30 years.  XOM has an equity summary score of 9.6 out of 10 for a Very Bullish outlook.

Chevron Corporation (CVX) engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream.  CVX unearthed an 11.1% increase in its quarterly dividend to 90 cents per share. The new dividend will start being paid in June.  The new dividend yield is 3.39%. CVX has a significant amount of cash in its balance sheet –$18.9 billion at the end of first quarter.  The company also announced it purchased $1.25 billion of its common stock in the first quarter 2012 under its share repurchase program.  CVX has an equity summary score of 9.4 out of 10 for a Very Bullish outlook.

Johnson & Johnson (JNJ) put a Band-Aid on its quarterly payout, increasing its dividend 7% to 61 cents per share. The new payout will be made on June 12 to shareholders of record as of May 29. The new dividend yield is 3.76%.  This is the 50th straight year the health-care products giant has decided to raise its payout to shareholders.  JNJ recently reported a higher first-quarter profit due to a foreign-exchange- related gain and lower expenses, though the currency impacts also weighed on sales.  JNJ has an equity summary score of 8.4 out of 10 for a Bullish outlook.

Building a High Dividend Yield, Low Beta Income Portfolio (Part 3)

For income investors wanting to go it alone, they should consider creating a portfolio of high dividend stocks with low beta.  This type of portfolio will provide a risk to reward profile during times of uncertainty in the markets.  By adding the component of a bullish outlook to the low beta stocks indicates these stocks can be held in a long-term portfolio.  The high dividend yield can be compounded over time and will increase as these stocks raise their dividends each year.  This portfolio will be built in a series of articles.  You can read Part 1 here and Part 2 here.  Below is Part 3 with more stocks to look at for adding your portfolio.

Philip Morris International Inc. (PM) manufactures and sells cigarettes and other tobacco products.  Separated from operations in the U.S. and the
regulatory and litigation risk of that market, PM will, in our view, be better positioned to innovate, tailor offerings to higher-growth emerging markets,
achieve cost savings, and incentivize managers.  We think PM’s low penetration of markets with potentially high cigarette consumption, such as China, India and Vietnam, also provides attractive opportunities.  Also, the spinoff provided PM with currency for acquisitions.  We believe its high cash flow generation is
supportive of regular stock repurchases and its dividend, which recently yielded 3.5%.  PM increased its dividend 20% in the last year.  PM has a 3-year beta
of 0.61.  PM has an equity summary score of 9.7 out of 10 for a VERY Bullish outlook.

Pfizer Inc. (PFE), a biopharmaceutical company, engages in the discovery, development, manufacture, and sale of medicines for people and animals worldwide.  The world’s largest pharmaceutical company, Pfizer produces a wide range of drugs across a broad therapeutic spectrum.  In October 2009, PFE acquired rival drugmaker Wyeth for some $68 billion in cash and stock.  Although we expect the loss of U.S. patent protection on Lipitor and negative foreign
exchange to result in lower earnings this year, we think the decline should be cushioned by strength in several key pharmaceutical lines, growth in emerging
markets, cost restructurings and common share buybacks.  The company recently announced a $10 billion buyback, of which $5 billion is expected to be purchased in 2012.  We are also encouraged by PFE’s pipeline, which comprises potential breakthough treatments for arthritis, heart disease and other conditions, as well as by the planned spinoff to shareholders of non-core businesses.  PFE has a dividend yield of 4.03% and a 3-year beta of 0.75.  PFE increased its dividend 10% in Q1 2012.  PFE has an equity summary score of 7.4 out of 10 for a Bullish outlook.

Johnson & Johnson (JNJ) engages in the research, development, manufacture, and sale of various products in the health care field worldwide.  We believe
JNJ’s diversified sales base across drugs, medical devices and consumer products, along with its decentralized business model, has served it well in the past and should continue to do so in the years ahead.  In our view, JNJ’s pharma segment should benefit from a number of key new products, including Xarelto blood thinner, Incivek treatment for hepatitis C, Zytiga for prostate cancer, and Edurant for HIV.  In late April 2011, JNJ agreed to acquire Synthes for $21.3 billion in cash and stock.  We see significant operating synergies accruing from the proposed Synthes combination, which is expected to be completed in the
first half of 2012. JNJ has a dividend yield of 3.59% and a 3-year beta of 0.49.  JNJ has a 5-year average dividend growth rate of 8.23%.  JNJ has an equity summary score of 8.2 out of 10 for a Bullish outlook.

Bershire Hathaway Portfolio Update

As of 12/31/2011, Berkshire Hathaway (BRK.B) owns 34 stocks with a total value of $66.2 billion.  The classic value investor Warren Buffett made a number of stock moves during the 4th quarter of 2011.  These are the details of the buys and sells.

Added: CVS Caremark Corp. (CVS)

Warren Buffett added to his holdings in CVS Caremark Corp. by 25.53%. His purchase prices were between $32.97 and $41.16, with an estimated average price of $37.2. The impact to his portfolio due to this purchase was 0.09%. His holdings were 7,106,500 shares as of 12/31/2011.

Added: Intel Corp. (INTC)

Warren Buffett added to his holdings in Intel Corp. by 23.17%. His purchase prices were between $20.62 and $25.66, with an estimated average price of $23.87. The impact to his portfolio due to this purchase was 0.08%. His holdings were 11,495,000 shares as of 12/31/2011.

New Purchase: Davita Inc. (DVA)

Warren Buffett initiated holdings in Davita Inc. (DVA). His purchase prices were between $60.64 and $76.81, with an estimated average price of $71.05. The
impact to his portfolio due to this purchase was 0.31%. His holdings were 2,684,500 shares as of 12/31/2011.

New Purchase: Liberty Media Corp. Liberty Cap (LMCA)

Warren Buffett initiated holdings in Liberty Media Corp. Liberty Cap. His purchase prices were between $61.11 and $79.67, with an estimated average price of
$46.2. The impact to his portfolio due to this purchase was 0.2%. His holdings were 1,701,400 shares as of 12/31/2011.

Added: International Business Machines Corp (IBM)

Warren Buffett added to his holdings in International Business Machines Corp by 11.43%. His purchase prices were between $173.29 and $194.56, with an estimated average price of $184.45. The impact to his portfolio due to this purchase was 1.83%. His holdings were 63,905,931 shares as of 12/31/2011.

Added: The Directv Group Inc. (DTV)

Warren Buffett added to his holdings in The Directv Group Inc. by 378.85%. His purchase prices were between $40.6 and $47.87, with an estimated average price of $45.35. The impact to his portfolio due to this purchase was 1.03%. His holdings were 20,348,400 shares as of 12/31/2011.

Added: Wells Fargo & Company (WFC)

Warren Buffett added to his holdings in Wells Fargo & Company by 6.18%. His purchase prices were between $23.18 and $27.785, with an estimated average
price of $25.68. The impact to his portfolio due to this purchase was 0.93%. His holdings were 383,703,628 shares as of 12/31/2011.

Added: Visa Inc (V)

Warren Buffett added to his holdings in Visa Inc by 25.02%. His purchase prices were between $84.26 and $103.15, with an estimated average price of $93.81. The impact to his portfolio due to this purchase was 0.09%. His holdings were 2,865,008 shares as of 12/31/2011.

Added: General Dynamics Corp. (GD)

Warren Buffett added to his holdings in General Dynamics Corp. by 26.52%. His purchase prices were between $55.67 and $66.92, with an estimated average price of $63.53. The impact to his portfolio due to this purchase was 0.08%. His holdings were 3,877,122 shares as of 12/31/2011.

Added: Verisk Analytics Inc. (VRSK)

Warren Buffett added to his holdings in Verisk Analytics Inc. by 63.96%. His purchase prices were between $33.06 and $40.13, with an estimated average price of $36.75. The impact to his portfolio due to this purchase was 0.08%. His holdings were 3,445,029 shares as of 12/31/2011.

Reduced: Johnson & Johnson (JNJ)

Warren Buffett reduced to his holdings in Johnson & Johnson by 22.51%. His sale prices were between $61.27 and $66.02, with an estimated average price of
$63.97. The impact to his portfolio due to this sale was -0.91%. Warren Buffett still held 29,018,127 shares as of 12/31/2011.

Sold Out: Exxon Mobil Corp. (XOM)

Warren Buffett sold out his holdings in Exxon Mobil Corp.. His sale prices were between $71.15 and $85.28, with an estimated average price of $78.88.

The Best Dividend Stocks for 2012 – Health Care

S&P recommends marketweighting the S&P 500 Health Care sector. Year to date through November 18, the S&P Health Care Index, which represented 11.6% of the S&P 500 Index, was up 4.0%, compared to a 3.3% drop for the S&P 500. In 2010, this sector index rose 0.7%, versus a 12.8% advance for the 500. There are 10 sub-industry indices in this sector, with Pharmaceuticals being the largest, at 51.7% of the sector’s market value.

S&P equity analysts have a neutral fundamental outlook on the key Pharmaceuticals sub-industry. We think this sub-industry faces challenging prospects in 2012, given an impending “patent cliff” beginning this year, austerity pricing in Europe, increasing generic drug penetration, and what we consider unimpressive new drug pipelines. On a positive note, emerging market sales are expected to continue to grow briskly in 2012. Also, increasing biotech M&A, low HMO utilization rates, attractive pharmaceutical sub-industry dividends and more efficient R&D spending offset the aforementioned negatives, in our view. According to Capital IQ, the sector’s P/E multiple of 10.7X consensus estimated EPS for 2012 is below the broader market’s P/E multiple of 11.3X. Its P/E-to-projected-five-year EPS growth rate (PEG) ratio of 1.3X is above the market’s PEG ratio of 1.0. This sector’s marketweighted S&P STARS average of 3.9 (out of 5.0) is slightly above the S&P 500’s 3.8.

The S&P GICS Health Care Index has broken out from a bullish, double-bottom reversal pattern, turning the intermediate-term trend to bullish, in our view. The sector also broke above a bearish trendline off the highs since July, confirming to us the trend change. Prices have popped back above both the 17-week and 43-week exponential moving averages, and the shorter average is back above the longer average, also bullish signs, in our opinion. Prices now face a small region of overhead supply between 400 and 420. Relative strength versus the S&P 500 was in an uptrend from February until the end of September, but that uptrend has broken to the downside. We have lowered our technical opinion on Health Care to neutral with a bearish bias, from neutral.

We recommend marketweighting the sector as we think an attractive valuation already reflects widely appreciated weak pharmaceutical drug pipelines and is therefore fostering more competitive performance as investors focus on newer positive catalysts and the sector’s defensive properties.

While patent expirations are hurting AZN’s growth profile, the company is making strides to launch new products, and currently approved drugs are still posting steady growth. We believe Astra’s most important new drug launches are diabetes drug Onglyza and cardiovascular drug Brilinta, which are showing respectable launches; we believe both drugs will eventually develop into blockbusters. Also, in-line products are generating steady growth, with the company’s leading drug Crestor up 14% operationally from the prior-year period. Despite mixed results against Lipitor, we believe Crestor sales will hold up well against low-cost generic versions of Lipitor expected by the end of the year.

Sanofi-Aventis’ (SNY) wide lineup of branded drugs and vaccines and a robust pipeline create strong cash flows and a wide economic moat. Growth of existing products and new product launches should help offset patent losses for cancer treatments Eloxatin and Taxotere as well as anticlotting agent Plavix.  Sanofi has compiled a robust group of late-stage pipeline products that complement its existing lineup and should help mitigate patent losses. We expect continued strength in the oncology class with potential blockbuster Zaltrap emerging from the late-stage pipeline. Also, diabetes drug Lyxumia looks to be a strong complement to the company’s well-entrenched diabetes franchise.

The table below shows the list of health care stocks making the high yield dividend stocks with bullish equity scores.

list of health care stocks making the high yield dividend stocks with bullish equity scores

Click to enlarge

 

 

4 Stocks with AAA Ratings

Rating agencies — S&P, Moody’s and Fitch — analyze risk and give debt a “grade” that reflects the borrower’s ability to pay the underlying loans.  The safest bets are stamped AAA.  That’s where U.S. debt has stood for years. Moody’s first assigned the United States a AAA rating in 1917.  The country’s new S&P rating is AA+ — still strong, but not the highest.

There are currently four U.S. companies that have a better credit rating than their own country, according to Standard & Poor’s: Automatic Data Processing, Exxon Mobil, Johnson & Johnson, and Microsoft.

For Exxon, J&J and Microsoft, S&P reaffirmed their AAA ratings recently, saying that “given the global and diverse business lines and significant financial strength” of the companies, “we expect the borrower to continue to fulfill its financial obligations, even in a sovereign default scenario.” S&P said the same of ADP, even though most of its customers are U.S.-based.

Depending on your trust in the rating agencies, the four horsemen (JNJ, ADP, MSFT, & XOM) are financially strong and have the ability to cover their debt.  These four companies are non-financials so the U.S. debt downgrades will not affect their ability to cover debt.

Of course, the real kicker is that these stocks all pay a dividend and frequently raise their dividends each year.  These stocks may be long-term holding to sell calls on each monthly for monthly income while also collecting the dividend.  If they get called away, then pick a new entry point and sell cash-covered puts to buy the stock.  This is the rinse and repeat trading philosophy.

For more on this topic: CNNMoney

 

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