JNJ FY numbers - diversified growth

Last week, Johnson & Johnson released their 4Q and FY numbers, beating market expectations. One of the reasons why I love the company as an investment is because it is basically three companies in one. Investment bankers have been licking their lips at the prospect of breaking the company up, arguing it unlocks value for the shareholder. A breakup probably will add value in the short term, over time though I think having a strong brand and some diversification across sectors is more important. Here is a breakdown of the company:



Reading through all of their brands and the therapies that they own, you realise how huge this company is. Unlike something like Alphabet, where over 90% of profits come from one product, JnJ has many products in different life stages. For example their diabetes division had 16% lower sales due to increased competition, but the electrophysiology and atrial fibrillation divisions registered growth of 20% and 13%, respectively.

Diversity is what you want in a healthcare company. One day you could wake up to find that your drug does more harm than good, not good if you are a 'one trick pony'. Due to JnJ's size and diversity, the stock is not going to shoot the lights out. Over the last 10-years the stock is 'only' up 120%, Amazon is up by more in less than 2-years. With that size and diversity comes strong cash flows. JnJ boasts a record of increasing their dividend every year for 55-years! We think this is a great anchor stock for your portfolio.