If You Bought 100 Shares of Johnson & Johnson 10 Years Ago, This Is How Much You Would Have Today
Johnson & Johnson might be celebrating its 137th birthday this year, but its explosive growth over the past decade resembles that of a company still in its infancy. In early March of 2013, Johnson & Johnson was trading at $77.75 a share. Nearly ten years later, it’s trading for $157.78 as of early March — more than twice as much.
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The Price of 100 Shares
What would you have today if you bought 100 shares of Johnson & Johnson 10 years ago? In March of 2013, 100 shares of Johnson & Johnson cost just $7,775. Those same shares are worth $15,778 today. However, that’s just calculating the underlying value of the stock.
If you were to reinvest the quarterly dividends, you would get a total return of $18,687.74. That comes out to an annual return of 10.38% over the last ten years. By contrast, the S&P 500 brought an annualized return of 10.02% over the same period.
Johnson & Johnson benefits from the economies of scale, which it’s able to realize due to its immense size. It also benefits from its diversified industrial base and eight major brands. How has this position of solid, underlying strength influenced Johnson & Johnson’s behavior and attitude toward the market? Despite the recent economic downturn, Johnson & Johnson still felt comfortable setting a $60 billion sales target for 2025.
This growth has been driven in large part by its oncology and immunology work. Darzalex, a multiple myeloma treatment, created more than $2 billion in revenue during the third quarter of last year alone.
The essential nature of the company’s work has blunted the impact of the ongoing supply shortages and inflation. Although Johnson & Johnson has been impacted by both factors, it has escaped the worst consequences of each. Regardless of temporary economic downturns, people will still need access to life-saving medicine. For this reason, life-changing medical services tend to have relatively inelastic price structures. This inelasticity reflects a position of market dominance and a somewhat captive audience.
About Johnson & Johnson
Johnson & Johnson operates in pharmaceuticals, consumer healthcare and medtech. This diversified approach has strengthened its overall economic standing.
It plans to further consolidate its position by spinning off its underperforming consumer health division into an entirely new company, Kenvue, later this year.
Growth and Future Outlook
With a diversified product base and a reputation for stability, Johnson & Johnson appears poised to continue its strong performance. Over the past 12 months, it’s managed to pull ahead of the broader economy. From March 1, 2022, to the present, the S&P 500 has fallen about 8%, while Johnson & Johnson stock has only fallen 6.5%.
Between 2013 and 2023, Johnson & Johnson experienced strong annual revenue growth. This coupled with its low debt to equity ratio, just 0.52 at the end of last year, gave Johnson & Johnson bedrock solid strength. During this time period, Johnson & Johnson continued to provide value to investors in the form of dividends. Currently, it has a healthy dividend yield of 2.90% which is just slightly above its average for the past decade.
For investors hoping to create a passive stream of income, nothing beats dividends. Johnson & Johnson’s strong record in this area makes it worthy of consideration for anyone pursuing this investment strategy.
Research and Development
Johnson & Johnson’s continued focus on R&D has borne fruit. In October of last year, its innovative new therapy method for treating blood cancer won FDA approval. That’s just one in a long line of recent wins for the pharmaceutical giant. Imbruvica, a drug for treating leukemia, also garnered praise from the FDA as the best treatment for pediatric patients with chronic graft-versus-host disease.
Furthermore, in November of last year, Johnson & Johnson announced plans to buy Abiomed, a manufacturer of heart pumps and other devices for the heart and lungs. This would add to its already expansive line of healthcare equipment, providing numerous synergies in the process.
Because Johnson & Johnson is already a mature company, some investors worry that it won’t be able to sustain its high level of growth going forward. However, recent changes to the company’s structure suggest these fears may be overblown. Johnson & Johnson’s divestiture of its underperforming consumer health wing should boost profits.
Smart investors know past performance does not guarantee future results. However, Johnson & Johnson’s steadfast excellence over the past decade — and its continued strength driven in large part by its robust and diversified product base — make it worth watching.
Information is accurate as of March 2, 2023, and is subject to change.
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