Johnson & Johnson

Methodology

Johnson & Johnson's diversified healthcare model across pharmaceuticals, medical devices, and consumer health products produces stable, predictable earnings that work well with this valuation method. The company's defensive characteristics and consistent growth make the fair value calculation more reliable than cyclical businesses. However, investors typically pay a premium above this baseline for JNJ's safety profile and dividend aristocrat status.

Methodology

Johnson & Johnson typically commands moderate premium PEG ratios reflecting stability and defensive characteristics rather than explosive growth. The healthcare giant's mature business model means high growth rates are unlikely, but the predictability of earnings commands higher multiples. Compare against other healthcare blue chips and JNJ's historical average to gauge relative attractiveness.

Methodology

Johnson & Johnson's substantial dividend yield and decades of consecutive dividend increases make PEGY essential for proper valuation. The company's commitment to returning capital through dividends represents a core part of the investment thesis for income-focused investors. PEGY more accurately captures the total return proposition that has made JNJ a cornerstone holding for conservative portfolios.