Is Johnson & Johnson Overvalued?

Johnson & Johnson (NYSE:JNJ) is a truly excellent company that can be found in many portfolios. It currently makes up 4.5% of my taxable dividend growth portfolio and for good reason: consistency. Johnson & Johnson has managed to grow it’s dividend for 53 consecutive years and if history is any guide they’ll be announcing another raise in one month’s time. This plants them firmly as one of premier Dividend Champions.

Every $1 invested in Johnson & Johnson a decade ago has grown at a 9.29% annualized rate to a value of $2.43. An investment two decades ago has grown 10.40% annually and is now worth $7.25. A $1 invested three decades ago is now worth $61.16 which is good for a 14.69% annualized rate.

It’s been nearly 4 months since I last analyzed Johnson & Johnson and its investment potential (Previous analysis can be found here). At the time shares of Johnson & Johnson had risen around 7% in a rather short time period to around $101. We’ve seen another 6.5% gain since February 11th removing much of the value proposition.

Shares of Johnson & Johnson closed trading on March 24, 2016 at $108.31 providing investors a current yield of 2.77%.

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