Then and Now – Johnson & Johnson
Welcome to another Then and Now post, a continuation of my series where I revisit some older blogposts and either rip them to shreds (because my thinking has changed on such subjects) or I’ll confirm my position on various personal finance topics or specific investments.
You can check out my previous posts in this series here:
Today’s post is about a U.S. dividend paying stock I’ve owned for many years: Johnson & Johnson (JNJ:US).
- I started writing about JNJ here – some eight-plus years ago. These were the very early days of this blog.
- In 2009, I was transitioning out of big bank mutual funds and I started looking at various U.S. dividend paying stocks to buy and hold. I found the dividend history of Johnson & Johnson (among other U.S. dividend aristocrats) very appealing.
- At the time, I recall JNJ was priced around $65 per share. Their dividend was $0.49 per quarter.
- Based on the historical juicy dividends delivered by this company, I believed JNJ along with a few other healthcare stocks would make a great home in my Registered Retirement Savings Plan (RRSP). This is because I could not only reinvest all the dividends paid by JNJ tax-deferred, I could also avoid withholding taxes on U.S. stocks if I kept such U.S. stocks (or even U.S. ETFs for that matter) inside my RRSP (vs. a TFSA, vs. a non-registered taxable account, other). You can read more about where I invest based on asset location here.
- I also bought JNJ because I found many broad funds including ETFs own this stock as one of their core holdings. I figured if this large-cap stock was good enough for all the major U.S. mutual funds and ETFs, it was good enough for me to own directly.
- Lastly, I decided to buy JNJ because like other Canadian stocks I own (e.g., BCE, BMO, BNS, ENB and more…) I wanted to participate in the potential capital growth and future dividend raises this stock might deliver. I also wanted more U.S. exposure.
- At the time of this post, JNJ is trading at about $130 USD per share. Effectively, the stock price has doubled since I bought it just over seven years ago.
- At the time of this post, JNJ pays a dividend of about $0.84 USD per share. The dividend has increased about 70% in the last seven years.
Short-term and long-term, I have no intention to sell this stock. I will continue to buy and hold Johnson & Johnson for the foreseeable future. I will continue to reinvest all the dividends paid every quarter. (I’m currently DRIPping one share per quarter to buy more JNJ stock commission-free.) I save up the leftover cash that I cannot reinvest into JNJ stock to buy more units of my favourite U.S. ETFs (VYM) every year or so.
I’m optimistic our basket of U.S. stocks inside our RRSPs will continue to grow. Growth from JNJ and other stocks should provide a nice retirement nest egg when coupled with this major dividend income goal from the Canadian stocks we own.
Time will tell!
What are your thoughts about my approach to buy and hold JNJ? What are some of your favourite U.S. stocks to own? Thanks for reading and sharing.