Saturday, April 25, 2015

Johnson & Johnson Dividend Increase and Quick Obsevations

One of my beautiful, boring, US stocks with global sales diversification is Johnson & Johnson (“JNJ”). As they had for 52 consecutive years previously, on Thursday, the Board of Directors at JNJ increased their dividend yet again, this time by 7.1%. With a yield at close to 3%, and a reasonable P/E ratio of about 18X, I’m fine with continuing to hold JNJ, collecting an ever increasing stream of dividends year after year.

A couple of companies in my portfolio had some interesting price changes this past week. I thought I’d share a couple of observations regarding these price changes below, as I found them amusing.
-          Friday morning Microsoft announced strong quarterly results and their stock subsequently went up over 10%. It’s hard to believe in efficient markets when a stable, solid, stead-as-she-goes company like Microsoft can jump 10% on one quarterly earnings release. I know some equity analysts would tell you differently, but having read through the company’s comments, nothing material jumped out at me.
-          I own some monthly dividend payers (i.e. Alaris Royalty, H&R REIT, Corus, etc.) and always find it interesting to watch their price spike just before a shareholder of record date. I can somewhat understand when quarterly dividend payers show price spikes before their record dates, but for the life of me, I don’t get why monthly dividend payers show the same behavior. That said, I’ll totally take advantage of the usual fall off in price after the shareholder of record date to pick up shares on the cheap.
-          Prior to announcing their quarterly results, Rogers was trading at a 52-week low. After announcing mixed results (earnings miss, revenue meet), Rogers is now up almost 10% off their 52-week low. This might be short-term investors moving into the company in order to pick up the next quarterly dividend, it might be investors expecting bad results and then being pleasantly surprised, it could be lots of things. As a long-term investor in Rogers, I was happy to pick up my latest block of shares at a bargain basement price.

Here’s hoping that dividend aristocrats continue to regularly boost their payouts, markets continue to be inefficient, and that I’m able to benefit from both phenomenon!  A good weekend to all!

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