Johnson & Johnson (JNJ) is growing after having corrected recall issues from last year. It also changed its CEO and bought Synthes, which provides the company with exposure to the growing business of medical devices in Europe, says Gary Bradshaw, Senior Vice President and Portfolio Manager at Hodges Capital Management.
“For the first time in a long time, we think the stock of Johnson & Johnson, which is AAA rated, is going to continue to do real well. The stock yields 3.09%, and they just recently raised their dividend 8%. They’re buying in stock, cash flow is extremely strong, and it’s a very high-quality company that we think is well positioned to continue to grow,” Bradshaw said.
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Bradshaw says JNJ has been raising its dividend for over 50 years, and the flow of capital out of bonds should eventually end up in blue chips like Johnson &Johnson.
“We think as bonds continue to sell off, there is going to be a big wave of money that will go into equity income, and even though equity income has pulled back temporarily, we think it’s just a correction. And these blue-chips that are growing their earnings and raising their dividends will be great beneficiaries of money coming out of the bond market,” Bradshaw said.
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