I originally bought my first position in JNJ in September of 2009, about 2 minutes after closing my purchase for Coca-Cola (KO) (first stock purchase I ever made). At the time I was thinking that these two stocks could be the long-term bedrocks of whatever my portfolio turned into. KO became exactly that while JNJ....eh.
This is no fault of JNJ. Yes they've had some bad press more regularly than I would like in terms of recalls and such but in terms of being an investment you can't knock their stability. In fact the stock was so stable that when I went through my "100% growth stock" phase at the end of 2010 this dividend monster got the boot so I could free up cash to buy exciting stocks like...Interdigital...which actually worked out because I made a significant profit off of Interdigital.
You read that correctly: I understand that capital gains are important for wealth building (gasp). If you are so narrow-minded in your investing approach that you only try to make money one particular way then you are leaving money on the table. That is not smart.
Back to the story: I deployed, did some reading, and decided to take the mountain of cash that the taxpayers were giving me in return for getting shot at to build a portfolio that could generate income on its own through dividends instead of through me working to earn some capital gains (most of the time at least). It was due to this new strategy that JNJ was permitted to receive my investment dollars once more. When the price remained stable (and still undervalued) over the next few months I added to the position just before the stock broke out. Whether it keeps flirting with $70 or not is of little interest to me: I'm in it for the dividends. As long as JNJ doesn't try to throw a giant capital loss in my face then I am perfectly content to collect its growing dividend payments from now until I retire early, rich, and young. If it quintuples in price then I'll take that too (and look to take the capital gains and invest them in some other undervalued dividend stock).
For those of you who like pictures (meaning me), here is the four-year play-by-play in chart form:
|Source: Big Charts|
Have a good weekend and try to tune out all the noise coming from CNBC as earnings season heats up.
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