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Johnson & Johnson (JNJ): Why Will This “Boring” Healthcare Company Produce Exciting Gains in Your Portfolio?

Other great rock-solid choices in the sector

There are several good long-term names to choose from in the healthcare sector, Johnson & Johnson (NYSE:JNJ) just happens to be my personal favorite. Pfizer Inc. (NYSE:PFE) and Merck & Co., Inc. (NYSE:MRK) are both perfectly good additions to your portfolio.

Pfizer produces a wide range of prescription drugs including such well-known names as Lipitor, Lyrica, and the infamous Viagra. One potential downside is the lack of diversification to other areas of healthcare, such as medical devices or OTC products like J&J produces. However, Pfizer trades at a very attractive 12.8 times this year’s earnings and pays a very good 3.37% dividend yield. While not quite as stellar as Johnson & Johnson (NYSE:JNJ) in terms of cash/debt ratio, Pfizer Inc. (NYSE:PFE) still has a very attractive balance sheet. The company is spending about $7 billion annually on R&D and has 25 drugs in late-stage development.

Merck & Co., Inc. (NYSE:MRK) also produces a variety of prescription drugs such as Januvia, Zocor, and Singulair. Merck pays the highest yield of the three at about 3.67% annually, and trades for 13.2 times 2013’s expected earnings. Merck is also a very ambitious company; with the most R&D spending of the three featured here ($7.9 billion) and has 20 products in the late stages of development.


Whichever you choose, my primary objective here is to get you to throw out the preconceived notions (especially prevalent among younger investors) that companies like these are boring investments. Johnson & Johnson (NYSE:JNJ) happens to be my personal favorite in the space due to its amazing record of past performance, current financial health and stability, and commitment to future growth and development.

The article Why Will This “Boring” Healthcare Company Produce Exciting Gains in Your Portfolio? originally appeared on and is written by Matthew Frankel.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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