Building a portfolio utilizing a dividend investing is pretty easy; once you find a stock you like, all you have to do is keep adding fresh capital to it (assuming of course, the fundamentals of the company haven’t changed and you still believe in the product/service they sell). The one thing to watch is price. As long as the stock is trading near or below fair value, figuring out which stock to allocate your fresh capital to is really a no-brainer.
That’s what I’ve done with JNJ.
If you recall, my first ever buy was JNJ back in July. Since then, the fundamentals of the company have not changed dramatically. The latest earnings report headline reflected a sales decrease of 7.4% of year-over-year growth; however, this was largely due to the impact of foreign currency issues and masked an underlying sales growth of close to 1% in business revenue.
- The P/E ratio is currently 19.2 which is slightly above it’s 5 yr average. In addition, JNJ P/E is currently below the broader market.
- S&P Capital IQ Valuation: $105.90
Again, it’s hard to go wrong with JNJ. I anticipate I will continue to add shares of this stock to my portfolio, as long as I see value. For this stock, anywhere under $100 (barring a substantial change to management or financials) seems like a fair price to pay. And since I am starting early and not really focused on strict asset allocation at this time (I will once my portfolio gets to the $50K range), I am OK with adding whenever I have the capital to support a purchase.
This additional purchase of JNJ adds an additional $30 to my annual dividend income, based on the current $0.75 quarterly dividend.
Full Disclosure: Long JNJ
Thanks for reading.
Images: Death to the Stock Photo with graphics added by One Woman’s Worth.