You have lived another year and a very growing trend is many baby boomers or those that were born between 1948 and 1964 also lived another year. The reason to highlight this group is they are larger than previous generations and after the 1960s size of families began to fall. The baby boomers typically have 5 plus children in their family, while the generations afterwards had smaller families between 1 and 3. This generation caused increased number of schools, post secondary education, housing and list goes on. As the generation increases in age, with the leading edge beginning to retire, as time goes on they will age similar to everyone else. The demands on the health care system will be the greatest as the baby boomers live into their 80’s and 90’s. One stock that has been a great performer over the years and should benefit from this trend is Johnson and Johnson or J & J. In a recent article from John Heinzl, jheinzl@globeandmail.com titled J & J: A prescription for growing dividends, Mr. Heinzl explains why owning the stock is a wonderful thing.

It is a dividend machine – for 52 years it has increased its dividend, usually in April. Given a 47% payout of earnings, growing free cash, a triple A credit rating, the company is expected to continue with the increases.

Its total returns are impressive – the stock price has been climbing, if you owned the company and reinvested the dividends you would have earned 8.3% over the past 10 years. Low risk for you, relatively high returns.

It is diversified – there are 3 companies – pharmaceuticals (43% of sales in 2014); medical devices (37%) and consumer health products (20%). In addition more than half of its sales come from outside the US.

It has demographics on its side – see piece about the baby boomers aging.

It is growing – J & J constantly develops new products, since 2009 it launched 14 drugs that sold over $ 27 billion in sales. They have more drugs in the pipeline.

Its valuation is reasonable – the stock is trading at 16.4 times estimated earnings. The analysts on Wall Street are positive for 2015. The shares trade around $100 a share.

Linking to dividend paying stocks, J & J is one of those stocks many institutions own because it trades at $100 and it consistently provides a good return. For the past number of years with a low interest rate, getting a 8% return with limited risk has been a very good thing to earn. J & J is the type of company to own to hold for a long time, to take advantage of its financial results and to earn money with a lower risk return.

There are more questions than answers, till the next time – to raising questions.