Johnson & Johnson (JNJ) is well known around the dividend growth investing community with over 50 consecutive years of dividend increases. Chances are there's Johnson & Johnson products in your medicine cabinet right now and if you've ever had to take prescription medicine or had a medical procedure you've most likely used its products even if you didn't know it. Johnson & Johnson is a diversified giant in the health care industry. Johnson & Johnson closed trading on Friday, July 11th at $105.10 giving a current yield of 2.66%.
Analysts followed by Yahoo! Finance expect Johnson & Johnson to grow earnings 6.96% per year over the next 5 years and I've assumed they can grow at 5.22% (75% of 6.96%) for the next three years and at 4.00% in perpetuity. Running these numbers through a discounted earnings analysis with a 9% discount rate and summing over 30 years yields a fair value price of $111.61. This means the shares are trading at a 5.8% discount to the discounted earnings analysis.
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