Blog Post

Summary

• Both are top 50 S&P companies with a consistent history of paying attractive dividends.
• Both companies are well-positioned for the commanding leads in the $4.1 Trillion health care sector.
• Both companies’ balance sheets are well-positioned for potential future health care acquisitions.

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In the great game of investing, and in life for that matter, one of the most critical tools is having a great team. A single-player or soldier, in this case, stocks, is essential. However, it is ultimately the team that lays the foundation for success. Investing heavily in one stock is precarious. You are positioning your financial future on a single point of success or, more often than not, failure. A better strategy is to have a team of players that do one thing exceptionally well. They focus on being the best in their business.

Brilliance in the Basics- You already have a connection to these companies.

Before you read this article today, there is a strong chance you used a minimum of one of the products produced by these companies. From toothpaste to Tylenol, these companies have you covered from the time you wake up from the time you go to bed. P&G is the maker of Bounce, Crest, and Downy, while J&J is the maker of Benadryl, Sudafed, and Splenda. That is just a small example of the plethora of products both companies produce that people use daily.  

One of the best parts of both companies’ consumer product lines is the wide range of the average customer. Newborns to senior citizens use one or more of these companies’ products daily.

Next time you are in the grocery store, look at a shelf, and you will see first-hand the command of the shelf space these two companies alone control. At the same time, consumer staples are lucrative segments for both businesses. The medical sector is where they mint money.

Strong Performance in Pharmaceuticals and Medical Devices

J&J’s most significant segments are pharmaceuticals and medical devices. In the first quarter of 2022, pharmaceutical sales contributed nearly $12.8 billion, and medical tech sales accounted for an additional impressive $6.9billion. J&J focuses more on traditional pharmaceuticals as well as undertakes significant R&D investments. More recently, with their one-dose version of the COVID-19 Vaccine. Recently, the FDA has limited it to confident adults. However, the company is still heavily invested in more traditional metabolic and oncology drugs and treatments. Earlier this year, the company announced its intent on splitting into two separate companies—one company for pharmaceuticals and one company for consumer goods. In the first quarter of this year, the company had $12.9 billion of pharmaceutical sales, up 6.3 % 

P&G, on the other hand, focuses more on traditional over-the-counter drugs and treatments than J&J. Some of P&G’s primary health care products include: Oral-B, Crest, Metamucil, Pepto-Bismol, and Vicks. P&G is also expanding its skincare line; it already owns Olay, with two acquisitions in the last three quarters. The acquisitions are likely to fall under P&G’s new Specialty Beauty Division. 

 In November of last year, the company bought Farmacy beauty, a startup that focuses on younger clients. However, P&G skincare rollups did not stop with Farmacy. In April this year, P&G bought Tula skincare, a more high-end skincare line, for an undisclosed sum.

Recession-Proof Businesses & Well-Positioned to Thrive with Inflation. 

One of the strengths of both companies is the inelastic nature of many-core businesses and product lines. People will still need healthcare and daily everyday life’s basics- like laundry.  

P&G was also one of the first major companies to warn of the coming price hikes. But, more importantly, they announced it last year, while many in the Federal Reserve and Treasury Department still stuck to the position that inflation was “transitory.” 

At the same time, both companies are still facing logistical challenges. More recently, with P&G, with news that feminine care products are facing a supply shortage that corresponded with the nationwide baby formula shortage. P&Gs quickly announced steps to help the supply and ramp up production.

Long Endurance in Business 

Johnson & Johnson and Procter & Gamble have a long track history since 1886 and 1837, respectively.

 The companies have been through multiple periods of market turmoil in peacetime and wartime. They survived the Great Depression, 70s inflation, and the Great Recession of 2008′. But, they wouldn’t be able to do so without having their eye on the ball when watching their bottom lines.

More importantly, both companies have a long track record of paying out consistent dividends for the individual investor. Johnson &Johnson currently has a dividend yield of 2.61%. Procter &Gamble has a dividend yield of 2.68%. 

Which One, J&J or P&G?

The key to success with a popular stock, or any stock for that matter, is proper stock allocation. You don’t win the game with one player on the field. You need a team. A stock portfolio is nothing more than the players you have in the game. 

 A stock price, although necessary, doesn’t tell you all the information an investor needs. First, you need the share count, which you have to be a subscriber. The share count allows you to concentrate and focus on your position. The right portfolio strengthens and grows your capital, with our portfolio reducing single stock risk.

The market changes daily, why shouldn’t your portfolio.