5 Long-Term Stocks to Buy and Hold According to Warren Buffett

3. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 83

Berkshire’s Holding Period: 12 Years

Johnson & Johnson (NYSE:JNJ) is an American multinational healthcare firm. Warren Buffett’s Berkshire Hathaway has been a long-term shareholder of Johnson & Johnson (NYSE:JNJ), with the stock featuring on the portfolio since Q4 2010. In Q2 2022, Buffett’s fund owned 327,100 shares of the company worth $58 million. On August 19, Johnson & Johnson (NYSE:JNJ) declared a $1.13 per share quarterly dividend, payable on September 5 to shareholders of record on August 23. The company is a reliable dividend king, with 58 years of consistent dividend growth under its belt. 

On July 21, UBS analyst Kevin Caliendo assigned a Neutral rating to Johnson & Johnson (NYSE:JNJ) and lowered the price target on the stock to $180 from $185. The company’s Q2 results confirmed the macro undercurrents, which include the significant currency movement, high inflation, and slow elective procedure recovery, the analyst told investors in a research note. He added that China will potentially impact MedTech, but at 5% of Johnson & Johnson (NYSE:JNJ)’s sales, the risk seems “largely contained”.

Rajiv Jain’s GQG Partners is the biggest stakeholder of Johnson & Johnson (NYSE:JNJ) as of Q2 2022, with 6.5 million shares worth $1.16 billion. Overall, 83 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ) in the June quarter. 

Here is what Mayar Capital has to say about Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter:

“J&J is currently our largest position and a long-standing holding. The majority of the group’s sales comes from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.

Here’s how JNJ makes and spends a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics.

To make that dollar, however, JNJ typically spends about 25 cents to make the products themselves and another 27 cents on marketing and general administrative functions. This leaves JNJ with about 48 cents on the dollar in profit…” (Click here to see the full text)