For more than 50 years, Johnson and Johnson has been a staple in a dividend growth investors portfolio. I, too, am a holder of Johnson and Johnson and will continue to do so for a long time! But what exactly makes them such a good investment for long term dividend growth investors like myself? The answer is pretty simple, but I’ll let them speak for themselves.

“Cutting-edge science, digital technology and new ways of thinking are improving how people are cared for around the globe, and we are at the forefront. We are the world’s most broadly-based global healthcare business, with more than 275 companies in 60 countries, and our companies touch all aspects of human health, from consumer products to pharmaceuticals and medical devices. Through them, we forge new frontiers and blow through walls to create breakthrough solutions to the world’s most pressing health challenges to help people live longer, healthier and happier lives.”

When it actually comes down to it, Johnson and Johnson has their hand in a large portion of their field(s). They own or produce the following products which should all sound quiet familiar:

Johnson’s Baby Products

Aveeno

Neutrogena

Clean & Clear

Band-Aid

Bengay

Neosporin

Listerine

Rembrandt

Splenda

Visine

Acuvue

Tylenol

Sudafed

Pepcid

Benadryl

Now I could write a list probably 10 times as long of common purchases that you have probably made throughout the years and they would all be owned or produced by Johnson and Johnson. If that is not enough to convince you to buy Johnson and Johnson and hold the stock forever, there are a few more reasons.

I am a dividend growth investor and I love it. Johnson and Johnson, as I said before, has been a staple in dividend growth investors portfolios for 50 years. But what does it meant that they are a dividend growth stock? Johnson and Johnson has increased their dividend payout for 56 years in a row! Every year, like clockwork, Johnson and Johnson increases how much money is returned to their investors. What investor does not like money being returned to them in the form of a check, every quarter. Currently, Johnson and Johnson pays $3.60 per year, per share of the stock that you own. You do not get that all at once, though. It comes as four quarterly dividend payments of $0.90. This payment annually reflects a 2.71% dividend yield.

You might be thinking that $0.90 per quarter does not sound like a lot. And in comparison to other investments you could make right now, you are definitely right. However, let’s say that you bought shares of Johnson and Johnson almost 50 years ago, in 1970. I know, that is a long time ago, but Johnson and Johnson was only paying $0.0167 on a share price of less than $2.00. Imagine holding onto the shares for that long and receiving all of the dividend payments along the way, reinvesting them and accumulating more shares. I can imagine it and I wish I was alive back then to have purchased some shares. Now think about your $0.90 per share per quarter that you are getting. You are getting a 180% yield on cost. Yield on cost is defined as the current annual dividend (which is $3.60) divided by the initial price per share that you paid (which is about $2.00). That is an absurd return on your investment and Johnson and Johnson does not appear to be slowing down any time soon.

Johnson and Johnson is a great investment for the long-term dividend investor like myself. If you are as patient as me, then you should consider accumulating some shares of this stock and hold it forever.

Disclosure: I am not a licensed financial advisor nor is the information mentioned above financial advice.

I am long Johnson and Johnson.

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