Johnson & Johnson (JNJ): The Best Stock For Long Term Investors

Why Johnson & Johnson Is A Good Investment

If you read some analysts thoughts on Johnson & Johnson, they will point to various ratios that claim the stock is overvalued. One such metric is that the stock is priced at 17-times forward earnings, but the company is only growing its earnings per share at 5% annually.

While this metric is true, it is overlooking that J&J is going to keep growing at 5% annually. The company is no longer a growth stock. It is a large medical services company that, with the various name-brands it owns, can continue to churn out revenue and pay a healthy dividend.

And that is why this stock is a great option for those looking for a solid, long term performer to hold in their portfolio. As stated at the beginning, you aren’t going to double your money by the end of the year when investing in this stock. But you are going to get growth in the stock price while collecting a healthy dividend along the way.

This is why so many dividend investors love the stock (1). They can set it and forget it. They are getting a great yield and do not have to worry. They can focus their attention on other companies growing their dividends that might be flying under the radar.

So while the stock does look expensive, know that you are getting a long term performer that will stand the test of time.

Note: This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.