This all adds up to it being a staple stock for many institutional and experienced investors. However, it is also ideal for those who are just starting their trading journey. This raises the question: how do you buy shares in Johnson & Johnson?
Johnson & Johnson – Weekly Price Chart – 2002-2022
Overview of Johnson & Johnson
Johnson & Johnson’s Q2 earnings update posted on 19th July 2022 provides a concise summary of how the firm operates. It posted an earnings beat with its EPS and top-line revenue beating the forecasts of market analysts, but only just. The EPS, for example, came in at $2.59, which squeezed past the Zacks Consensus Estimate of $2.57. It then issued a downgrade on projected Q3 earnings and outlined to investors the many challenges it faces, such as the rise in the value of USD impacting its performance in cash terms.
This resulted in the JNJ stock price bouncing by as much as 7% soon after the announcement was made, before retracing back to earlier levels. This solid if unspectacular performance of the firm and the stock price is very much in line with previous earnings announcements. JNJ isn’t a stock to buy to light up your portfolio, but it is one to buy to give your portfolio the stability needed for other stocks to shine.
If there is an economic downturn that drags down the price of high-beta growth stocks, then the defensive nature of Johnson & Johnson shares will really kick in and offer enough protection to avoid the need for panic selling.
On the subject of panic selling, this is something that the majority of Johnson & Johnson shareholders don’t engage in. Its shareholder base is dominated by long-term, passive institutional investors such as tracker funds and retail investors. Those groups own 24% and 30% of the total float of JNJ stock, which means that more than half of JNJ shares are locked up in buy-and-hold-style strategies.
Johnson & Johnson – Weekly Price Chart – 2012-2022
The profile of the typical Johnson & Johnson shareholder means that price volatility is relatively low, and when the firm releases good or bad news, the share price reaction tends to be muted. Johnson & Johnson is to a large extent about ‘slow and steady wins the race’, and given that level of security, the impressive 83% share price performance between 2015 and 2022 looks even more appealing.
Johnson & Johnson Shares: the Basics
Johnson & Johnson is one of the largest companies in the world and has a market capitalisation of $415bn. Founded in 1886 and headquartered in New Jersey, it develops medical devices, pharmaceuticals and consumer packaged goods for a global client base. Its stock is listed on the New York Stock Exchange under ticker JNJ and the firm forms part of the Dow Jones Industrial Average (DJIA) and S&P 500 indices.
The dividend yield is currently 2.68% and the P/E ratio is 16.4. The strong balance sheet and the firm’s position in a defensive sector means that it has an impressive AAA credit rating. It is one of only two corporations that rank as AAA, and this also means that the firm has a higher credit rating than the US government.
Johnson & Johnson Fundamentals
As a multinational firm, Johnson & Johnson generates a significant percentage of its earnings in non-USD markets. This means that the trading bottom line is exposed to the value of the USD to other currencies. The stronger the US dollar, the greater extent that earnings in other currencies are ‘devalued’ when they are reported back on the US books and ledgers. If the US dollar weakens in relation to other currencies, then the process is reversed, and overseas returns can boost the bottom line in terms of USD reporting.
Johnson & Johnson Broker Ratings
Of the 17 analysts that IG reports as following the stock, five regard the stock as a Strong Buy, five as a Buy and seven as a Hold. None of the analysts have a rating lower than Hold.
Steps to Buy and Sell Johnson & Johnson Shares
Buying Johnson & Johnson stock is as easy as clicking a button. Online brokers have revolutionised the finance industry and offer a user-friendly way of taking your first steps into the market. Thanks to new entrants coming into the market, the pricing terms offered are super-competitive and brokers also compete for clients by offering additional services such as free research materials.
Research Johnson & Johnson Shares
Johnson & Johnson shares would make any shortlist for investors looking to buy just one stock. There are ways of double-checking your decision-making processes and techniques to use to optimise your trade entry point. Brushing up on the different types of analysis used for long-term investing can optimise your returns and turn an okay return into a stellar one.
Find a Broker
It is important to ensure that your broker is well-regulated. The firms found on this shortlist of trusted brokers have all been reviewed by the AskTraders team to ensure that they not only offer a good service, but also that client protection is provided.
One rubber stamp to look for is confirmation that your broker is regulated by a Tier-1 regulator such as the Financial Conduct Authority (FCA). Firms that are licensed by the FCA have to comply with a detailed set of rules and regulations. This is a direct benefit to clients, but as the process is costly, any firm that goes to the trouble of being regulated is flagging up that it’s a legit company with a long-term business plan.
Open and Fund an Account
Signing up to an account takes moments to do and the onboarding process is carried out online. You’ll need to upload some personal ID and verify your identity so that you, the broker and the regulator have a clear understanding of the type of investing you are going to carry out.
An alternative approach involves trying out a free Demo account. These accounts can usually be set up by providing little more than an email address, and as they use virtual funds, they allow new and experienced traders to test out a platform, get a feel for trading, and establish if a broker is a best fit.
When you’re ready to buy JNJ shares, the next step is to fund your account. Like the rest of the process, this has been set up to be hassle-free. Typical funding options include credit and debit cards, bank transfers and ePayment agents. Some of the payment protocols allow transfers to be made immediately and most incur no additional charges from the broker. One thing to look out for in the small print is whether your broker charges fees on withdrawals. Not all do, and they tend to be small in size, but a check of the T&Cs will protect the bottom line of your trading returns.
Once funds are credited to your new account, you’re ready to go.
Select and Buy/Sell Johnson & Johnson Shares
The simplest way to buy Johnson & Johnson shares is to head to that stock’s monitor on your trading dashboard. Enter the quantity of shares you want to buy, as an amount of shares, or a cash amount, and click or tap ‘Buy’. At that time, your purchase will be reflected in your online account by the cash amount reducing, but your account being credited a position in Johnson & Johnson stock.
The total value of your portfolio will be determined by the live market price, which will feed into your account on a real-time basis.
Set Order Types
Broker platforms also offer a variety of other trade order types that can be used to help you manage the life of your trade.
Limit Orders are instructions to buy stocks at a certain price level. If JNJ is trading at $173, you could set an order that takes advantage of intraday price volatility and that will buy the stock at $171. There are obviously no guarantees, but if you’re successful, you’ll be optimising your trade entry point.
Stop loss and take profit orders are instructions built into your position that will instruct the broker to automatically sell some or all of the position if price reaches a certain level. Stop losses offer protection to the downside and ensure that your account isn’t wiped out by one bad trade. Take profits work in the other direction and crystallise gains if you make the right call.
Some buy-and-hold investors don’t use stop losses and take profit instructions. They run the risk of you getting stopped out of a trade during a momentary ‘flash crash’ or limit your potential upside. Other approaches to risk management include trading in small size and only using an amount of money you can afford to lose. JNJ is a relatively safe blue chip stock, but rule number one of successful investing is to respect the markets.
When you decide to close out your Johnson & Johnson position, it’s simply a case of reversing the process. Navigate to the portfolio section of your account, select the position, and enter the quantity you want to sell. At that point, the unrealised profit/loss will become a realised profit/loss, which will be reflected in the cash balance of your account.
Best Brokers to Trade Johnson & Johnson Shares
Finding the best broker for you can be an arduous and daunting task, which is why we have handpicked this selection of firms that tick all of these boxes to help you get started. Trying out different brokers using a Demo account is a great idea as it’s a risk-free way to try out their platforms. Alternatively, these firms have been reviewed by AskTraders analysts to ensure that they offer competitive T&Cs as well as reliable service.
Fees When Trading Johnson & Johnson Shares
When choosing your broker, it’s important to make the right call in terms of whether you set up a CFD (contract for difference) or share dealing account. CFDs have superior functionality and can support strategies that apply leverage. They do, however, come with additional daily financing charges, which, while small, can stack up over the long term. As a share dealing account involves buying and selling stocks outright, it’s in line with traditional share trading processes – but it is easier and cheaper due to the process being carried out online.
A more detailed breakdown on the differences between CFDs and shares can be found here. However, if you’re looking to buy Johnson & Johnson shares as a medium or long-term investment, then the more cost-effective approach would be to opt for the share dealing option.
|Inactivity fee details||$10 per month – after 12 months||$10 per month – after three months||$10 per month – after three months|
|FX conversion||Yes – on non-base currency trades||Yes – on non-base currency trades||Yes – on non-base currency trades|
|Fund withdrawal fees||Yes – $5||Applied on some payment methods||Yes – $5-$100|
|Trading commissions||Included in spread||Included in spread||Included in spread|
|Overnight financing||Yes – on CFDs||Yes – on CFDs||Yes – on CFDs|
Johnson & Johnson stock is denominated in US dollars. If your trading account has a base currency of GBP, EUR, AUD or any other non-USD currency, then there could be frictional costs related to converting from one currency to another. You may be able to avoid these by doing some research on which broker to use, and it is worth factoring in that US stock trading is one of the most cost-effective of any financial markets.
Whether you are an experienced investor or are a complete beginner, Johnson & Johnson is a stock that needs to be on your shortlist. Past performance is no guarantee of future returns, but it’s hard to challenge the idea of JNJ stock being the gift that keeps on giving. The firm’s recent earnings announcement suggests that like other stocks, it faces certain challenges in the near future, but the headline earnings data confirmed that once more, it had beaten analyst expectations.
Optimising your returns involves following a few simple ground rules about how to buy JNJ stock, with the most important being to use only trusted brokers. Once you have set up with a good broker, you’ll be in the best position to take your first steps towards buying Johnson & Johnson stock and developing an understanding of just why it’s so popular with all types of investors.