Any stock market portfolio that’s being used to save for retirement or otherwise, should have some exposure to the pharmaceutical industry.
But instead of pure play corporations like a discovery biotechnology firm, there are great businesses out there that offer a combination of pharmaceutical development and consumer products.
This extra diversification provides a lot of safety and a growth opportunity, as well.
On the stock market, one of a number of blue chip corporations that are great brands and offer this combination of pharmaceutical and consumer product exposure is Johnson & Johnson (NYSE/JNJ).
Johnson & Johnson is up 20% since the beginning of the year, which is pretty spectacular. Institutional investors are buying safety, and this is what Johnson & Johnson offers.
There are actually only a handful of corporations that are large-cap, blue-chip pharmaceutical and consumer products businesses.
Another of these corporations is Abbott Laboratories (NYSE/ABT). The company just beat the Street with its latest numbers.
On the stock market, Abbott Laboratories is trading at its record high and looks to be in a fairly solid uptrend. Of course, it’s very difficult to make a case for buying any stocks in this kind of market. The company’s stock chart is below:
Stock chart courtesy of www.StockCharts.com
Abbott Laboratories reported global sales of $5.4 billion, representing an increase of 3.5% on an operational basis. The company’s nutritional products division experienced a nine-percent gain in sales, while diagnostics grew 6.4%.
Earnings from continuing operations in the first quarter of 2013 were $544 million, or $0.34 per share, compared with earnings from continuing operations of $351 million, or $0.22 per share, in … Read More
Corporations, like investors everywhere, are very reticent about current business conditions. They have been this way for years. And they have way too much cash, which is why dividends have been increasing.
The financial crisis really was the catalyst for a huge change in the way corporations allocate their capital. Corporations hunkered down on costs and became extremely tight with their money.
It is highly likely that large corporations will increase their dividends this earnings season. Of course, this will be great news for those investors who seek out dividends from blue chips.
This market is at a high, but it is fairly valued and has a lot of potential to increase further—if corporations can produce growth and there is no major new shock from an event, like a currency default in Europe, for example.
There is still tremendous reticence on the part of corporations to invest in new business operations, new plant and equipment, and new full-time employees. And while this is not a positive for the Main Street economy, it is a positive for shareholders collecting dividends.
Corporations are sitting on a mountain of cash. In many of the earnings results so far, large corporations are reporting too much free cash flow. And they need to do something with all this money, because cash does not earn a rate of return greater than the rate of inflation.
One of the easiest ways to do this is to return the money in the form of dividends to stockholders. I still firmly believe that blue chip investing will do well over the long term.
There may be some spectacular downside … Read More
Investing isn’t all about managing returns; it’s also about managing risk.
Risk is high right now in all categories: real estate, stocks, bonds, currencies, and even cash. On the cusp of a new earnings season, the stock market is going to be very choppy, but I do think that it will trend higher.
There is no real need to be buying this stock market. With so much uncertainty and so many risks beyond your control, the sidelines are a good place to be.
But the powerful breakout of blue chip and transportation stocks at the beginning of the year is very meaningful.
Of course, many stock market investors have been sitting on the sidelines for a long time. This was the case for institutional investors until the beginning of the year, when sentiment changed. The advertised certainty of continued low interest rates provided the catalyst for new buying.
The last three earnings seasons reflected the choppiness and the uneven performance of many industries in the U.S. economy. But the stock market always wants to be in front of any economic news, and institutional investors have no other place to put their money.
With so much risk in this marketplace, the standout companies have become even more attractive. And this is what institutional investors have done since the beginning of the year—they have gone after the safest names, because they see all the risks, as well.
Large dividend-paying stocks will continue to be attractive in this stock market for the rest of this year. Many are still not expensively priced, and there should be decent earnings this quarter. Robust earnings are … Read More
The performance of many blue chips—consumer staples stocks, in particular—is really stunning. And looking at the shares and how much they’ve moved on the stock market, even since the beginning of the year, you really have to wonder how sustainable this stock market rally is.
I am a big believer in blue chips and investing in stocks that pay growing dividends over time. But right now, we have so many companies trading right at their all-time record highs. I wouldn’t say that the stock market is expensively priced, but realistically, other than momentum players, would individual investors be buying these stocks at their all-time record highs? I find that unlikely.
The stock market breakout really is meaningful and pronounced. Consider The Procter & Gamble Company (NYSE/PG), which has been bid up approximately 16 points since last summer. Procter & Gamble’s stock chart is featured below:
Chart courtesy of www.StockCharts.com
The stock market is most definitely due for a break. The leadership from blue chips has been significant, but it also reveals the fragility and uncertainty in the marketplace. Institutional investors want to buy stocks, and they are; but they are buying the safest names.
For the stock market’s current momentum to continue, technology stocks are going to have to show more leadership going forward. Investors are buying in anticipation of a decent first-quarter earnings season.
Among the many blue chips that are soaring in this stock market, consider Johnson & Johnson (NYSE/JNJ). This stock has been rising consistently and strongly since the beginning of the year. Its performance is so unusual. It really is a powerhouse breakout. Johnson & Johnson’s … Read More
There are a lot of great stocks out there with proven track records for making money. These are retirement stocks—brand-name stocks that pay dividends to create wealth. With dividend reinvestment, you can effectively compound this wealth in an easy, costless manner.
One blue chip company that I’d like to highlight is Johnson & Johnson (NYSE/JNJ), which has an outstanding track record of increasing its dividends to shareholders and achieving capital gains on the stock market.
I couldn’t get data for before 1972, but Johnson & Johnson has increased its annual dividends every year since then. Since 1972, the company’s stock has split three-for-one on two occasions, and two-for-one on four occasions. The company’s last share split was on June 12, 2001, and the stock is definitely due for another split.
On the stock market, Johnson & Johnson recently spiked 10 points higher. And that’s just since the beginning of January. The company’s long-term stock chart is featured below:
Chart courtesy of www.StockCharts.com
Track record-wise, the stock is up well over 10-fold within the last 20 years, and that’s just capital gains; that doesn’t include dividends paid.
Everyone knows Johnson & Johnson’s consumer products; the company’s baby shampoo is for sale virtually everywhere. But Johnson & Johnson is much more than that. It’s dozens of popular healthcare brands, skin creams, and medicines. The company’s pharmaceutical research in oncology, contraceptives, immunology, and vaccines is extensive. Finally, Johnson & Johnson manufactures implants, diabetes care products, and joint replacement products. It’s a company with hugely favorable exposure to demographic changes and an aging population.
Of course, this is why Johnson & Johnson is rarely … Read More
There is a resilience to this stock market, and regardless of the reason, it’s a play by institutional investors that first-quarter earnings season will be decent, as well as further earnings growth later this year.
While it’s tough to think about with the stock market at its highs, this market could go a lot higher yet, based on continuing stimulus from the Federal Reserve and a slight improvement in business conditions.
One of the best things available from the massive cash balances that large corporations have accumulated is increasing dividends. The stock market saw a lot of new dividend announcements last year, partially because of tax changes but also because companies can afford it.
This is a trend that is going to continue this year, and it’s good news for blue chip investors who are saving for retirement.
There are a lot of attractive blue chips that are growing their earnings and are not expensively priced in this stock market. Wal-Mart Stores, Inc. (NYSE/WMT) is five points below its recent high; it has a current dividend yield of 2.6% and a price-to-earnings (P/E) ratio of about 14.5. Wal-Mart’s longer-term stock chart is featured below:
Chart courtesy of www.StockCharts.com
Wal-Mart has been trading sideways for years, and its recent stock market breakout is meaningful. Again, Wal-Mart is not expensively priced, and Wall Street continues to nudge the company’s 2013 earnings estimates higher.
This upcoming earnings season is make or break for the stock market. Most corporations were coy with their forecasts last quarter, but they do this on purpose so as to show outperformance. But even with these conservative forecasts, most … Read More