Is Johnson & Johnson a Good Investment?

PHOTO CREDIT: Johnson & Johnson

OVERVIEW

Johnson & Johnson is a company based in the United States. The company designs, manufactures, and sells a wide range of personal care and healthcare products around the world. The company makes consumer products (like soap and bandaids), medical devices, as well as other pharmaceutical goods (like drugs and vaccines). The company was founded in 1886.

Why You Should?

1. The one-shot COVID-19 vaccine is a great reason to purchase some Johnson & Johnson stock. The demand for one-shot COVID-19 vaccines is in high demand in countries with low vaccination rates. As the demand for these vaccines is very high, the company can continue to sell billions of dollars of vaccines.
2. Johnson & Johnson has an extremely diverse business. The company makes goods found in many households (bandaids, soap, lotion, and other products), but also manufactures higher-margin products in its pharmaceutical and medical devices business. This diverse business will benefit the company and investors in the company.
3. Johnson & Johnson is a great dividend play in an investor’s portfolio. The company currently offers a dividend of $4.24 (or 2.42%). The company has also been increasing this amount every year as well. A high dividend is a great thing for investors looking for some passive income while investing. This will also help the company’s stock price growth in the long term.
4. Johnson & Johnson is an extremely safe investment option due to the essential nature of the products that the company sells. Regardless of the economic times, consumers around the world will still need to spend on personal care and other pharmaceutical goods in order to stay safe and maintain a high quality of life. This will help the company go through rough times.
5. The company operates an extremely profitable business model. With a net profit margin of 27%, a growing number shows the company has a strong profit margin. This will help the company’s stock grow in the future and will also help the company further grow and diversify its business. This will also benefit investors in the company.

Why You Should Not?

1. The company faces tough competition in the personal care and pharmaceutical industry. Some of these competitors include Abbvie, Procter and Gamble, Pfizer, and many others. This competition might hurt the company and its investors in the future.
2. The company faces a negative political environment. From piling legal fees (due to the many lawsuits filed against the company) as well as a Democratic-controlled House and Senate (may pass bills to lower the cost of healthcare), the company might see many headwinds in the mid to long-term.

MY OPINION

I think that Johnson & Johnson is a great long-term investment due to its COVID-19 vaccine, its diverse business, a good dividend, a safe investment option, as well as a profitable business. However, tough competition and negative impacts from the political environment might hurt the company and its investors.