Johnson & Johnson
First up is health care giant Johnson & Johnson (JNJ). You can't find a stock that's more your prototypical blue-chip than Johnson & Johnson is. JNJ's business ranges from a pharmaceutical arm to medical devices to a massive consumer healthcare unit. Band-Aid, Neutrogena and Tylenol are just a few of the household names that fill Johnson & Johnson's product portfolio.
JNJ's health care exposure means that the company is less susceptible to economic headwinds than most stocks with massive consumer exposure; customers aren't going to stop buying Tylenol just because they're tightening their purse strings. While trading down to store brands has been a concern for JNJ, the company's brand is strong enough to keep its customers stickier than most. Medical devices and pharmaceuticals have even deeper moats because they generally don't face the same kind of competition that Johnson's consumer business does.Johnson & Johnson has a very strong balance sheet with a deep net cash position (in other words, the company has more cash on hand than it has debt). That, and massive cash generation abilities, should keep the firm's dividends flowing in 2012. Recently, management announced a 7.02% dividend increase, bringing its quarterly payout to 61 cents per share -- a 3.73% yield at current price levels. If you're an income investor, JNJ is an ideal core holding for your portfolio. Let me put it this way: If you're an income investor and you don't own shares of this $180 billion health care stock, you're doing it wrong. I also featured J&J, one of 10 Dividend Stocks Held by Highly Rated Fund Managers, in "10 Dow Dogs That Are Barking for Gains."
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