Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Johnson & Johnson (JNJ), Unilever plc (ADR) (UL), General Mills, Inc. (GIS): Three Income Growth Stocks for Steady Returns

Page 1 of 2

Large conglomerates are generally low-beta blue chips that effectively reduce the risk attached to a portfolio. They record steady growth and often carry a modest yield, serving the purpose of income growth investing. But in the process of finding such low beta stocks, investors often lose out on growth prospects and end up buying overcrowded income stocks. So here are a few companies that offer a significant upside despite having a modest dividend yield.


Johnson & Johnson (NYSE:JNJ)

Shares of Johnson & Johnson (NYSE:JNJ) have appreciated by an impressive 38% in the year to date while still offering a hefty dividend yield of 3.08%. Its forward price-to-earnings ratio of 14 times may suggest that its shares have reached a fair value, but I believe that it has plenty of upside.

This is because the healthcare behemoth just announced that it will acquire Aragon Pharmaceuticals for $650 million. The company operates in the research and development of prostate cancer drugs, and its ARN-509 drug directly competes with Medivation’s Xtandi and Dendreon’s Provenge. Even Johnson & Johnson (NYSE:JNJ)’s Zytiga is targeted towards prostate cancer, and the acquisition will certainly supplement Johnson’s research in the field.

After a series of failed trials in Alzheimer’s therapy, many pharmaceutical companies including Baxter International discontinued their research work in the field. Johnson & Johnson (NYSE:JNJ) reverted back to treating patients in initial phases of the disease, however, with an aim to restrict its growth. Since Alzheimer’s is a widespread disease with no cure, patients will be kept on a continuous medication regime. This could translate into a steady stream of income for Johnson & Johnson (NYSE:JNJ).

The company also recently announced the launch of its Invokana drug to battle diabetes. In my opinion, these positive catalysts should be enough to power up Johnson & Johnson (NYSE:JNJ) for the rest of the year. It was the fastest-growing pharmaceutical company last year, and I believe that it will top the list once again.

Consumer goods

Shares of Unilever plc (ADR) (NYSE:UL) carry a lucrative yield of 3.58%. Its shares have appreciated by 25% over the last year, yet they appear to be borderline undervalued on a forward earnings basis.

The company generates around 57% of its revenues from emerging markets, while Europe accounted for 27%. Since the real growth of personal and healthcare products lies in emerging markets, Unilever plc (ADR) (NYSE:UL) has been targeting Asian markets for the same reason.

To do that, Unilever recently announced that it will increase its stake in Indian-based Hindustan Unilever to 75%, at an estimated cost of $5.4 billion. As of now, Unilever plc (ADR) (NYSE:UL) owns a 52.8% stake in the joint venture, which altogether posted $3.8 billion in fiscal year 2011 revenues.

On top of that, Unilever plc (ADR) (NYSE:UL) also divested its Wish-Bone dressing business in January of this year. In a bid to divest its non-core food assets, the company sold off its frozen foods business to Hormel Foods Corporation (NYSE:HRL) for $700 million. While this was a positive boost to its cash, analysts feel that Unilever is not done with its restructuring.

Unilever plc (ADR) (NYSE:UL) has been shedding its non-core assets since 2011, and its management recently indicated that it can offload another $1 billion worth of its annual turnover. Such moves may shrink the company’s overall revenues, but the company can grow more rapidly and efficiently with its non-core segments off the table.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!