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+--- Thread: Healthcare Stock Question - ABTv. JNJ v. Baxter (/showthread.php?tid=1207)
Healthcare Stock Question - ABTv. JNJ v. Baxter - Augie - 05-25-2015
Long time lurker first time poster.
I am a 31 year old professional looking to build up half of my portfolio in dividend stocks (sticking the other half in your standard S&P500, Bond, and Intl. Stock vanguard funds).
I began funding the dividend portion of my portfolio about a year ago and can only buy a few positions (Roth) a year. Currently, my portfolio largely reflects the recent dips in some quality companies (BP, NOV, BBL, GE, CB).
I am most interested in long term performance of the portfolio.
This all leads me to my question: I am about ready to buy into my first healthcare stock. I am currently focusing on Baxter and ABT, however, i could probably take a harder look at JNJ.
What is the collective thought on these stocks? My reading has lead me to the following conclusions: (1) Baxter is relatively cheap regarding the uncertainty with the spin off. This could represent an opportunity, but likely the dividend will be stagnant for a several years as the companies settle themselves. (2) ABT has executed great for a bazillion years which is why investors are going to pay a premium for the stock. It has continuously found a way to provide high returns and grow. (3) JNJ is relatively cheap because of the growth concerns.
My current lean is towards Baxter because of the combination of cheap and room to grow. What are your thoughts? Is there another stock that I should focus on?
RE: Healthcare Stock Question - ABTv. JNJ v. Baxter - Dividend Watcher - 05-25-2015
Augie, first off, welcome to DGF! Glad you decided to join in.
ABT I haven't really followed since the ABBV/ABT split. I sold ABT and invested the proceeds into ABBV and have been very satisfied.
EricL had some valid and interesting points on BAX here. BAX froze their dividend in the first half of the 00's. There is still some uncertainty in my mind just what the upcoming split is going to produce. When they first announced it, it sounded like they were trying to copy ABT/ABBV when they did their split.
Of the three you mentioned, I would go with JNJ partially because it's a known entity to me. Credit rating of A+, one of only 3 companies attaining this rating, been increasing the dividend for over 50 years, the prescription drug division seems to have been doing well lately, management is very shrewd when it comes to M&A and won't overpay, probably around fair value now, and their product breadth is huge. Now, it won't fly to the sky but it will be rewarding shareholders for many years to come in my opinion.
I would probably add AMGN or GILD. AMGN has done a good job growing their dividend so far and has an interesting pipeline. GILD is just getting started but I like management's focus on their pipeline, especially the oncology portion. Both have been around for quite a few years and are probably entering the phase where they could be reliable dividend players while still financing a decent growth rate. GILD is untested in the dividend arena since their first dividend will be paid in June. I'm watching that going forward.
Hope my cursory comments help.
RE: Healthcare Stock Question - ABTv. JNJ v. Baxter - rayray - 05-27-2015
I second the welcome!
I realize you're doing a mix of dividend producing stocks with a mixture of regular funds through Vanguard. My ROTH is also with Vanguard with a divi and mutual fund mix. If you're looking at the Healthcare sector you can't go wrong with JNJ, a solid producer for decades. And within the Vanguard family the US Healthcare fund is really hard to beat, it has been one of my best investments for just about 18 years. I do own both but haven't looked at either as far as investing new money into these investments since I'm maxed out in the healthcare sector.
RE: Healthcare Stock Question - ABTv. JNJ v. Baxter - Augie - 05-27-2015
Thanks for the comments. I have taken a look at GILD, unbelievable record.
As for the Vanguard, right now I am doing a three fund portfolio there and rebalancing occasionally. But you are right, it probably couldnt hurt to tilt towards healthcare there.
RE: Healthcare Stock Question - ABTv. JNJ v. Baxter - EricL - 05-27-2015
I would add BDX, AMGN, and ABBV to your healthcare watch list.
Also ABC if you are looking for a higher growth, lower yield option.