Most of us use some form of Johnson & Johnson’s products regularly in our daily life. Tylenol, Band-Aid, Motrin, and Listerine are some of the many trademarked products offered by Johnson and Johnson (JNJ). As a result of its household practicality and deeply ingrained name recognition, JNJ has also been a very popular stock holding. Fortunately, for shareholders, it has performed very well over the last quarter century. In fact, $10,000 invested in Johnson & Johnson at the beginning of 1975 would have grown to over $391,000 at the end of 2006, not even including any dividends or spinoffs that may have occurred.
Since 1975, Johnson & Johnson has had 22 years of positive returns and 10 years of negative returns. The best returning years for JNJ stock were 1991, 1995, and 1985, earning 60%, 56%, and 46% respectively. Conversely, the worst performing years for JNJ stock were 1983, 1976, and 1993, with the losses for the year being 18%, 13%, and 12% respectively. The growth of Johnson & Johnson’s stock over the last quarter century has resulted in five stock splits with the last one being a 2 for 1 split in June of 2001.
Johnson & Johnson is one of the 30 stocks that make up the Dow Jones Industrial Average (DJIA). However, JNJ’s yearly returns are not as closely correlated with the overall DJIA movements as other stocks in the widely followed index. For example, General Electric (GE), has moved in the same direction of the Dow Jones nearly 94% of the time since 1975. Johnson & Johnson, on the other hand, has moved in the same direction as the DJIA a little under 72% of the time during that same time period. In fact, 9 of the 32 years since 1975, JNJ has moved in the opposite direction of the overall Dow Jones Industrial Average. Moving forward, I expect Johnson & Johnson to continue to steadily grow in the future as the usage of its dominant brand name products continue to grow along with the population. Of course, as always, do your own due diligence before making any investment decisions.