PG or JNJ Stock: Which Is Best for Dividend Investors?

Johnson & Johnson (JNJ) and Procter & Gamble (PG) are huge consumer goods companies, with one or the other likely owned by most well-diversified dividend investors. With PG’s dividend yield of 3.5% slightly more than JNJ’s 2.9% yield, the former might be seen as the superior dividend investment of the two. However, that’s not exactly true. JNJ and PG stock both trade at earnings multiples that are consistent with market averages. Neither have attracted great interest this year due to currency woes, and both have significant revenue and profit losses. However, if you remove the losses from currency, which is historically volatile and likely to rebound, one company is clearly superior.

With that said, Johnson & Johnson may be known as a consumer goods company but 80% of its revenue is created outside that industry, in pharmaceuticals and medical devices. This creates diversity, giving investors access to three large segments of the market with one single investment. Nevertheless, Procter & Gamble is largely seen as one of the safest investments in the market, having 21 brands with a billion dollars or more in annual revenue and 59 consecutive years of dividend increases. While true, PG stock troubles aren’t entirely macro related, as it seems that JNJ is stealing some market share. During this last quarter, Johnson & Johnson’s Consumer division sales rose 3.1% excluding currency, which includes a near 9% hike here in the U.S. That’s much better than Procter & Gamble performed, and drove Johnson & Johnson’s growth in the third quarter. This should be a concern for PG stock owners.

Source: InvestorPlace

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