Tag Archives: NYSE:JNJ

5 Key Stocks to Invest in 2020 and Beyond

Let’s cut to the chase. Here are the four types of stocks that you’ll want to be invested in 2020 and beyond. 

Rome, Italy. Image by Andrea Spallanzani from Pixabay

Tech stocks: e-commerce, cloud

Too many businesses have been impacted by the COVID-19 pandemic — some more so than others. Restaurants, tourism, and retailers have been more greatly impacted. On the contrary, the tech space has outperformed, as most tech companies operate in a growing pie. 

Particularly, you’ll want to invest in tech stocks that have exposure to e-commerce, cloud, or growing markets. Many of these stocks don’t pay a dividend, but investors should consider them for growth. 

Here are some examples: Alibaba (NYSE:BABA), Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG), Amazon (NASDAQ:AMZN), JD.com(NASDAQ:JD), Microsoft (NASDAQ:MSFT), Tencent (TCEHY), etc. They have greatly outperformed the U.S. stock market in different time frames, but the chart below shows the past five years.

Chart
Data by YCharts

Healthcare stocks

Healthcare is also another growth area you’ll want to stay invested in. There’s the megatrend of an aging population.  Additionally, healthy people want to stay healthy and sick people cannot go on without their drugs or medical devices. 

The most conservative investors would look into adding Johnson & Johnson (NYSE:JNJ) opportunistically as a core holding. Bristol-Myers (NYSE:BMY) is another quality dividend payer. JNJ yields 2.6%, while BMY yields 2.9%.

Abbott Labs (NYSE:ABT) and Medtronic (NYSE:MDT) are also A-grade healthcare stocks to consider on dips. 

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Dividend Yield Explained Simply: What’s a Good Dividend Yield?

If you’re new to dividend stock investing, you’d want to wrap your head around what a good dividend yield is. In this video, I’ll use real-world examples, including Johnson & Johnson (NYSE:JNJ), Apple (NASDAQ:AAPL), General Electric (NYSE:GE), and Simon Property Group (NYSE:SPG).

Overview

Graphic showing that dividend income can be used for vacations, retirement, and paying for bills and mortgage.

You’re probably interested in investing in dividend stocks if you’re here to learn about dividend yields and want to know what a good dividend yield is.

I’ll first explain what a dividend yield is, and what affects it. Then, I’ll follow with a super simple example as well as real-life examples, introducing some safe dividend stocks and their dividend yields.

Second, I’ll explain the difference between dividend yield and yield on cost and why they’re relevant to investors. 

Third, I’ll give examples on what makes a good dividend yield, as you may be wondering if, say, a 5% yield is better than a 2% yield. I can tell you right off that that it’s not always the case. 

Finally, I’ll recap the key takeaways at the end.

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3 Important Dividend Stocks In My Stock Portfolio

I have a strong reason to keep dividend stocks, Johnson & Johnson (NYSE:JNJ), Brookfield Infrastructure Partners L.P. (TSX:BIP.UN, NYSE:BIP), and Toronto-Dominion Bank (TSX:TD, NYSE:TD), in my portfolio.

Johnson & Johnson logo

Johnson & Johnson

Allow me to be crystal clear. J&J will not deliver the highest returns as a stock in the healthcare space. I have other stocks for that. At the moment, that includes deep-value dividend stock, CVS Health (NYSE:CVS).

However, J&J’s financial performance is highly stable and predictable. Since 1999, the diversified healthcare conglomerate has increased earnings every single year on a per-share basis. Not surprisingly, it has increased its dividend every year in that period as well. 

Source: F.A.S.T. Graphs – J&J’s earnings and dividends persistently grow

Therefore, J&J stock serves as an excellent anchor for a diversified portfolio. Even when a recession hits, there’s no need to worry about its staying power. In fact, in the last two recessions, it thrived with double-digit earnings and dividend growth!

To sum it up, JNJ stock serves as a stabilizer and high-quality cash cow in my portfolio. I’ll continue adding to it at good valuations as a core holding of my diversified portfolio. 

Currently, I’d consider the stock to be fairly valued to modestly undervalued. At $135 per share, it trades at 15.7x earnings and is estimated to have earnings-per-share growth of 6% per year over the next three to five years. The stock also tends to command a premium multiple due to its high quality.

JNJ stock offers a safe yield of 2.8% backed by a payout ratio of 44%. It’s set to increase its dividend in late April.  

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