How to Survive the Next Market Crash: Johnson & Johnson (JNJ), 3M Co (MMM)

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The consumer products segment was the slowest growing segment in 2011 with sales of $14.9 billion and sales growth of only 2%. This business is affected more when the economy struggles, so it makes sense that this segment did not perform as well as the others in 2011. JNJ sells a wide variety of consumer products including Band Aids, Rogaine, Tylenol, Splenda, Aveeno, Listerine and many other well known brands. I believe that this segment will perform much better in upcoming years as the economy recovers.

Johnson & Johnson’s dividend history has been excellent and includes 50 consecutive years of dividend increases. Its current dividend yield is 3.1% and its annual dividend has been multiplied 2.81 times over the last decade, from $0.80/share to $2.25/share. If Johnson & Johnson increases its annual dividend at this level over the next decade, your effective yield will be 8% based on the current share price. If Johnson & Johnson increases its annual dividend at this level over the next 20 years, your effective yield will be 23%. Johnson & Johnson (NYSE:JNJ)’s payout ratio is 55%, which means it should have no problem continuing to increase the dividend in upcoming years.

3M Co (NYSE:MMM) is an innovative manufacturer of a wide variety of products with 2011 sales of $29.6 billion.  Net earnings grew from $2.1 billion in 2003 to $4.2 billion in 2011. 3M has made it a priority to continue creating innovative new products. 3M is divided into six operating segments: Industrial and Transportation, Healthcare, Consumer and Office, Safety and Security, Display and Graphics, and Electronics and Communications.

Some of 3M’s well known brands include Post-Its, Scotch, Filtrete, Nexcare, and Command. Most people are not aware of the magnitude and diversity of 3M Co (NYSE:MMM)’s thousands of impressive products that are sold into virtually every industry that exists. The following is a small sampling:

3M Steri-Vac Sterilizer/Aerator for the sterilization of instruments in hospital applications
3M Respirators for fire and industrial applications
3M MDI Minimally Invasive Dental Implants
3M Detail Wax for automotive applications
3M Streaming Projector for movie and gaming applications
3M Refillable Spray Foam Insulation System

3M’s dividend history has been excellent and includes 55 consecutive years of dividend increases. 3M’s current dividend yield is 2.4% and its annual dividend has been multiplied 1.79 times over the last decade, from $1.32/share to $2.36/share. If 3M increases its annual dividend at this level over the next decade, your effective yield will be 4% based on the current share price. If 3M increases its annual dividend at this level over the next 20 years, your effective yield would be 7.2%. 3M’s payout ratio is 37%, which means that it should have no problem continuing to increase the dividend in the upcoming years.

The bottom line

Johnson & Johnson (NYSE:JNJ) and 3M Co (NYSE:MMM) are two stocks that you can rely on over the long term through recessions and prosperous periods. They have stood the test of time by providing investors with market-beating returns for well over 100 years. They have increased their dividend for 50 years or more, and I believe that this streak will continue for a very long time. I recommend that you consider including them both in your diversified, well-managed portfolio.

The article How to Survive the Next Market Crash originally appeared on Fool.com and is written by Greg Williamson.

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