Latest / The Curve / RTC40: One of the greatest returning dividend companies of all time (aka a dividend queen)

Transcript

RTC40: One of the greatest returning dividend companies of all time (aka a dividend queen) · The Curve

• 0:00
  Welcome to the Curve Podcast, a conversation for women who want to learn more about money,
• 0:07
  their money for the future they want to have. We're all busy in the pursuit for financial
• 0:12
  confidence and increasing your wealth should be a simple one. This podcast is for women
• 0:17
  to learn about investing in a non-scary or intimidating way. With short episodes, you'll
• 0:22
  have time to learn, digest and understand everything to do with the world of investing.
• 0:28
  So thank you for being here and for listening, because together we really can raise the
• 0:32
  curve.
• 0:33
  Hey, Vic.
• 0:35
  Hey, sir. How you going?
• 0:38
  Good, good. I must say, like, do I sound fine because I'm feeling a bit sick? I'm
• 0:44
  pretending that it's summer over here still yesterday, like it's what, September. And I was
• 0:48
  biking around London wearing, like, almost no clothing. I woke up this morning with
• 0:53
  such a sore throat. I was like, okay, it's actually turning to winter.
• 0:56
  That was like maybe when I got back from Europe and I went out in Ponserville and I was wearing
• 1:03
  like no pants. And I was like, I am still in Europe. It was seven degrees. And everyone
• 1:07
  said, whoa, it may well just want to sign being like, I just got back from Europe. Honestly,
• 1:12
  I must get my legs out because there's a tan on them that everyone needs to see.
• 1:17
  Exactly. I do not dare put on stockings at all.
• 1:21
  I have no idea what this episode is about, which kind of excites me because we haven't
• 1:26
  done that in ages. I feel like I've been a bit in on, like, what we're talking about.
• 1:30
  Yes, sure.
• 1:31
  I'm actually genuinely excited.
• 1:33
  Well, prepare to be surprised in a good way, I hope. Are we doing, like, a stock story?
• 1:39
  Is it a, a lesson? Like, what's, what's happening?
• 1:42
  Oh, was I supposed to prep for this one?
• 1:45
  I just throw it out there. Like, this is your turn, so far.
• 1:50
  Oh, good.
• 1:51
  I need to keep going way more late at times that I can Google the fuck out of whatever
• 1:55
  we're going to talk about.
• 1:57
  Maybe we should do a little row reversal podcast one day. That'd be fun.
• 2:01
  I actually have an idea for that. I want to show you my portfolio, like, I want to do
• 2:04
  a little peek into my portfolio and then see what you think.
• 2:07
  Yeah, nice. I like that. I like that.
• 2:11
  OK, we'll save that for another episode.
• 2:13
  But this episode, we are doing a stock story.
• 2:17
  We need like a little fungal.
• 2:19
  A little stock story jingle for that, Erigan.
• 2:21
  You're getting carried away with your production.
• 2:22
  I think we just keep in this lo-fi, lo-fi for now.
• 2:28
  We are talking about a company that we all probably use, their products, very regularly.
• 2:36
  If you've ever had a headache, if you've ever cut your finger, if you've ever had a,
• 2:43
  I don't know, had a baby.
• 2:47
  I'm still feeling not close to seeing what you're talking about.
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  They produce a ton of household products and household names that we use all day
• 2:58
  every day. So it is called drum roll, more production, please.
• 3:04
  I can actually put a drum roll in here.
• 3:06
  Have you done it?
• 3:07
  Yeah.
• 3:08
  OK. It'll sound tacky, but I'll do it.
• 3:11
  The suspense is killing me.
• 3:12
  I don't know in post-production, babe, but I don't even have like a drum roll on it.
• 3:17
  I was waiting.
• 3:18
  I was like, wow, OK, is she going to get the drum kit or like, oh my gosh.
• 3:24
  Oh my god, I love it.
• 3:25
  You think I'm that tacky, like, absolutely no idea how to do that.
• 3:30
  It's called Johnson & Johnson.
• 3:32
  Oh, yes, OK.
• 3:34
  Is this an Australian company?
• 3:37
  No, it is a US company.
• 3:39
  It is a massive, massive US company.
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  It's actually the eighth largest company in the S&P 500, which is the top 500 companies
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  in the US.
• 3:48
  Yeah.
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  So it's huge.
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  It's got a market cap.
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  So that is, it's shares that are outstanding to the public, times its share price of over 400
• 3:58
  billion, which is about 700 billion, New Zealand dollars.
• 4:03
  And just for a second, can we stop for people who don't understand what market cap is?
• 4:08
  So market cap is essentially how you define the size of a company, is that right?
• 4:12
  Yes.
• 4:13
  So it's the shares, times the price.
• 4:16
  So the number of shares, so if they had 100 million shares available for the public and
• 4:22
  they were at trading at $2 each, then that's the market cap is 200 million.
• 4:29
  But so the reason that we would find out the market cap is just essentially so we know
• 4:34
  how big the company is.
• 4:36
  Yes.
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  It's good to like compare with other companies.
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  So if you've got like a $400 billion market cap company, that means that's massive, really.
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  And we kind of group companies into small, medium, and large.
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  And small is usually under like one or two billion, which still sounds like a lot, but
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  it's pretty small for in the US.
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  And then that's a small company.
• 5:01
  It's small one.
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  Yeah, because to be a public company, you have to be pretty big in the first instance.
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  So then to be a small public company, you're already kind of big if that makes sense.
• 5:12
  Yeah, yeah.
• 5:13
  Yeah.
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  And then usually these companies have, you know, 10, 20, 100 million shares available.
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  So then if they list them at $1, then you're already at 100 million, you know, like it's
• 5:25
  kind of, and then obviously if the share price is well, then the market cap, so the size
• 5:31
  of the company increases.
• 5:33
  Got it.
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  Yes.
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  So this is a large cap company.
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  This is a very large cap company.
• 5:38
  Yes.
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  Could almost be an mega cap cap.
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  Yeah.
• 5:42
  200 billion, did you say?
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  400 billion.
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  400 billion dollars.
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  And is that on their balance sheet?
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  Or what's that?
• 5:49
  No.
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  So that's their equity.
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  So that's their value, the value of the shares and the shares are called equity.
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  So it's not cash.
• 5:56
  So it's the valuation of the business.
• 5:59
  Got it.
• 6:00
  And it's usually created as a, like you come up with the price because it's like a multiple
• 6:05
  of the earnings of the business that makes sense.
• 6:08
  Yes.
• 6:09
  Not really.
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  But we'll just move on from that.
• 6:12
  Anyway.
• 6:13
  So Johnson and Johnson.
• 6:14
  So these, this company has, you know, over 100 different brands and 100 different products
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  that reach a billion people every day.
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  Well, that's not.
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  A billion people.
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  A billion.
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  A billion.
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  There's only eight billion people on the planet.
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  So yeah, it's a pretty crazy.
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  Yeah.
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  And they've got, oh, like 140,000 employees around the world.
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  And to have got about 100 billion dollars in sales a year.
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  140,000 to do say employees.
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  Yeah.
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  That'll be our small baby.
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  My God, I just could not.
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  Imagine a few are managing.
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  Even ten people would be hard.
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  Yeah, I know.
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  And I'm sure that's back.
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  And so who's the CEO of Johnson and Johnson?
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  So it was actually started about 140 years ago.
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  So it's a very, very old company.
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  And what did it, did it start with just body wash?
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  Because I feel like when I think of Johnson, Johnson, that's all I think of.
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  No, that was started by a pharmacist actually and his two brothers.
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  So it's kind of like a family business.
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  And they started out doing kind of pharmaceuticals.
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  And then yeah, they moved into more consumer products.
• 7:27
  I think about Band-Aid is one of their products.
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  They were in lots of trouble recently, weren't they?
• 7:33
  They took the band-aid stuff and it was like you've only got white band-aid stuff.
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  You've only got white band-aid stuff.
• 7:38
  Yeah, yeah, yeah.
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  It's literally called band-aid, isn't it?
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  The brand.
• 7:42
  Yes.
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  Yeah.
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  Yeah.
• 7:45
  Yeah, the most like comment.
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  I can't remember growing up with band-aid.
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  Like, you know, like that was.
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  We didn't really have another branded plaster.
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  And I always think of band-aids as band-aids.
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  Yeah.
• 7:53
  Yeah.
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  It's like when you pick.
• 7:55
  Yeah.
• 7:56
  When you become a verb.
• 7:57
  Wow.
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  Is that a verb?
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  Gosh.
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  I wasn't good at English.
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  I always mean.
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  Yeah.
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  When it's like, I'm going to go to the hoovering.
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  And it's like hoovering is actually a hoover is a brand.
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  You're doing the vacuuming.
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  You know?
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  Like, yeah, I'm going to.
• 8:10
  Let's over there.
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  But you might get a taxi.
• 8:12
  You might get a lift.
• 8:13
  You might get a, yeah.
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  An ola.
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  That is.
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  Yeah.
• 8:17
  Okay.
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  So obviously huge brands.
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  What are the big brands do they have that we might have heard of?
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  Nutrigena.
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  Okay.
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  The Johnson brand is huge itself.
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  Uh, and Listerine.
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  So the mouthwash.
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  My gosh.
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  Yeah.
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  Remember those like, um, tongue.
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  Um, what did they call it?
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  Oh, yeah.
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  Listerine things.
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  But in the weekend.
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  I just had had like an espresso martini.
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  And I, I hate the smell of coffee breath.
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  Like I think it's disgusting.
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  Yeah.
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  And I was sitting in like the uber on the way to the wherever we were going to clubs.
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  We were in a taxi.
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  And I was like, does anyone have.
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  And I was like, does anyone have.
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  A mint.
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  Some gum.
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  And then out of nowhere.
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  I was like, or a Listerine's drip.
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  And I was like, low, low and has those anymore.
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  But we used to all have them in our handbags.
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  And it's school and stuff.
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  I used to be such a boss.
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  I still am a boss with mint.
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  Like honestly, I put them in for about.
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  Five seconds.
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  And I'm like.
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  Like it's honestly, like I can't handle it.
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  Do you have smelly breath though?
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  Because I feel like.
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  No.
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  No.
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  My breath smells like roses.
• 9:20
  No.
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  I just.
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  Get the true one.
• 9:23
  Let's get in touch with some ex-boyfriends.
• 9:25
  Yeah.
• 9:26
  Oh gosh.
• 9:27
  Yeah.
• 9:28
  So they don't want to see us emissage if you've been hooked up with my carers.
• 9:32
  The phone's just going to be going off the hook.
• 9:35
  The phone is if we like.
• 9:38
  It is studio.
• 9:39
  There is.
• 9:40
  Oh.
• 9:41
  No.
• 9:42
  So they've got three divisions in Johnson Johnson.
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  So one is the.
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  Is the household products or the what they call the consumer products.
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  So kind of a thing with mentioned.
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  Then they've got pharmaceutical drugs.
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  So these are like drugs for when you're sick.
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  And then they've also got medical devices, which is a whole range of things.
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  So they've kind of got three business divisions.
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  So they're pretty diversified.
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  So consumer products in itself.
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  Having household products like that that are real staple items.
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  Are really defensive in kind of any market conditional, any economic condition,
• 10:18
  because you know, if you cut your finger or you need to go to wash your hair.
• 10:23
  Yeah.
• 10:24
  You're still going to do it.
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  You know, and if you own a whole bunch of brands within the shampoo category,
• 10:30
  even if someone kind of does what we call like trade down,
• 10:33
  you might not get the panting, but you might get the pams or something.
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  You know, like if you own all those products in that category,
• 10:39
  then you still get that customer.
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  You don't lose that customer.
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  So when you're when you have, you know, over 100 different brands,
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  you've got all those different price points of consumers.
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  So even if we get into a recession and you own, you know,
• 10:53
  a lot of brands in the shampoo category, for example,
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  you're still going to get that customer.
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  You're not going to lose that customer to someone else.
• 11:01
  That's got a cheaper brand.
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  So that's the benefit of having such a massive product suite.
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  Under Johnson & Johnson is that you no matter what the market condition is,
• 11:12
  you're still going to get that customer.
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  So that's a really a big plus for Johnson & Johnson being really well diversified
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  in the consumer products of their business, but also in pharmaceutical drugs.
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  Again, a really, really defensive category.
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  You know, if you get sick or if you own medication,
• 11:30
  you're still going to need that no matter what.
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  And then also with medical devices, again,
• 11:35
  with an aging population, everything, pharmaceuticals and medical devices
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  are still going to do really well.
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  People get older, but they want to say active,
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  and they need hip replacements or spine surgery.
• 11:48
  They're certainly going to use those Johnson & Johnson products.
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  So it's a really well diversified business, in my opinion.
• 11:56
  Now you're going to hate me for bringing this up, but...
• 12:01
  Well, am I right in thinking that from an ethical investing standpoint
• 12:05
  that Johnson & Johnson isn't the most brilliant for some reason?
• 12:10
  I don't know why, and I might be getting my wires crossed,
• 12:13
  but I think I remember there being stuff in the news
• 12:16
  or like headlines about it.
• 12:18
  Was that in this company?
• 12:20
  So they produced, to produce talcum powder.
• 12:24
  And it came out like talcum powder.
• 12:26
  Or talcum powder.
• 12:27
  Yeah, I know.
• 12:28
  I was brought up on talcum powder.
• 12:29
  I was like, I'm fine.
• 12:30
  I think my grandma used to put it in her hair.
• 12:33
  Yeah, even when I was older and I put it on myself
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  like as a real nostalgic thing,
• 12:38
  because it always felt like home.
• 12:40
  But yeah, there was a better controversy around that,
• 12:44
  and then Greens and it...
• 12:45
  And so they did a big product recall on that.
• 12:49
  Was it because of the actual, what was in the product?
• 12:52
  Yeah, I think it was causing harm to babies,
• 12:54
  like it wasn't good.
• 12:55
  Oh my God, that's so good.
• 12:57
  But what I would say, and I'm not condoning this at all,
• 13:01
  and anything that we say on this podcast,
• 13:03
  and sorry we should see this at the beginning,
• 13:05
  this is purely education,
• 13:07
  like that we are not giving advice to go and buy J&J.
• 13:09
  We're not telling you to buy it or to sell it
• 13:12
  or do anything with it.
• 13:13
  We're literally just giving you.
• 13:15
  And we're just explaining the facts about the company
• 13:17
  and leading you guys make your own decisions.
• 13:19
  Because there might be people who are listing who might be like,
• 13:21
  oh, well, yeah, I don't condone with them out of packaging
• 13:24
  that the brands use.
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  Or there's probably a lot to, you know,
• 13:28
  especially a company that they, with that many consumer products,
• 13:31
  they would be, I imagine,
• 13:33
  and things in terms of, yeah, production line,
• 13:36
  or where it's produced, or the price point,
• 13:40
  or the formula, like there's so many,
• 13:42
  if you've got that many brands,
• 13:44
  there's so many elements that, you know,
• 13:46
  some people might not feel comfortable investing in.
• 13:48
  Totally.
• 13:49
  Yeah, and there's always, that's the thing
• 13:51
  that's the thing with investing is that, you know,
• 13:54
  when you buy a share, someone is selling you that.
• 13:57
  And vice versa, you know, there's always someone
• 13:59
  that hasn't opposing you to you.
• 14:02
  And so you've kind of just got to realize
• 14:05
  and you've got to realize that when you're investing
• 14:08
  and just almost like, not stick to your guns,
• 14:10
  but just be like, okay, yes, look,
• 14:12
  I'm investing in this company because this, this, this.
• 14:14
  And if someone doesn't agree with me, that's fine.
• 14:17
  I can't, you know, there's always going to be,
• 14:20
  I think something wrong with a company.
• 14:22
  You have to choose your lesser evil.
• 14:24
  Like, what is it you want?
• 14:25
  Yeah.
• 14:26
  Like with Johnson Johnson, yes, I totally agree
• 14:27
  with the packaging thing and the consumer products
• 14:29
  and I get that, but on the flip side,
• 14:31
  you could look at this and go, oh my gosh,
• 14:33
  they employ so many people.
• 14:35
  They produce a lot of money.
• 14:36
  They have a lot of cash on the balance sheet
• 14:38
  to give back.
• 14:39
  And actually, you know, if they changed out one of their product lines
• 14:43
  into something more sustainable,
• 14:45
  or cyclable, that can make a huge impact.
• 14:47
  So it's kind of, it's honestly, like,
• 14:49
  I, I don't have a view either way,
• 14:51
  but everyone has a different view
• 14:55
  and that's completely obviously their choice
• 14:59
  and, and, and hats off to you for having one
• 15:02
  because it's so good not to just follow the crowd, you know.
• 15:06
  So I think it's an interest at, yeah,
• 15:08
  it's a really good point just to remind people
• 15:10
  like, this is an education platform, you know,
• 15:13
  like we're not, we're not financial advisors telling you,
• 15:15
  like every stock that we talk about,
• 15:17
  we're not like, go buy it mindlessly, you know,
• 15:20
  that's not the point.
• 15:21
  The point is to talk about different companies,
• 15:24
  what they do well, what they don't,
• 15:25
  and then you can make the decision on what you want
• 15:27
  to have in your portfolio.
• 15:29
  So, yeah, that's a good reminder.
• 15:31
  Even me and you, so if we don't agree on something,
• 15:34
  like, you're like, I know.
• 15:35
  Absolutely.
• 15:36
  It would never on that.
• 15:37
  And I'm like, oh, well, I would or like.
• 15:38
  And it's quite funny.
• 15:39
  Yeah.
• 15:40
  So, like, to the point where it's been contentious at times,
• 15:42
  we're like talking about a company,
• 15:44
  and I'm like, oh, but no.
• 15:45
  And Vic's like, well, yeah.
• 15:47
  Oh, my God.
• 15:48
  Or you'll be like.
• 15:49
  But it's good.
• 15:50
  That's boring.
• 15:51
  That's a boring company.
• 15:52
  Like not talking about Microsoft again.
• 15:54
  Yeah, but it's interesting because it's kind of like,
• 15:57
  if you think about the sorts of people that you date,
• 16:00
  you know, like there's not one person for everybody.
• 16:02
  You know, everyone has their cup of tea,
• 16:04
  whether it be the way they look,
• 16:05
  the way they act, you know,
• 16:07
  the sort of work they do.
• 16:08
  Like everyone's attracted to different things
• 16:10
  and people and friends and relationships.
• 16:12
  It's kind of the same with companies, right?
• 16:14
  It's like, you know,
• 16:17
  you're not all like the same companies
• 16:19
  or want to invest in the same companies.
• 16:20
  And that's great because there's diversity
• 16:22
  and there's something for everyone.
• 16:24
  It's like songs, music.
• 16:26
  It's like, yeah.
• 16:27
  There's songs that I can't stand.
• 16:28
  And it's like the number one on the charts.
• 16:30
  And I'm like, oh, who is listening to that?
• 16:32
  Yeah.
• 16:33
  Yeah.
• 16:34
  So it's kind of like you just make your piece
• 16:35
  with that and move on.
• 16:36
  And yeah.
• 16:39
  So if we unpack like a bit of the financials
• 16:41
  around the business,
• 16:42
  so I said it's got a hundred billion dollars
• 16:44
  of revenue per year, which is pretty amazing.
• 16:47
  But the reason I wanted to talk about this
• 16:49
  was because it's kind of a different company
• 16:51
  in terms of its return to shareholders or the way
• 16:54
  that the reason I like it is because it's
• 16:56
  it's a really, really good dividend stock.
• 16:58
  And we've talked a lot about
• 17:00
  everything companies that are growing their earnings
• 17:02
  and like really high growth companies.
• 17:04
  But this is a really
• 17:06
  different way that you can kind of diversify your portfolio
• 17:09
  if you wanted to in terms of having
• 17:11
  a bit more of a lower risk company
• 17:14
  in a way of a dividend company
• 17:16
  that pays out part of its earnings.
• 17:18
  So it's not just all about share price growth
• 17:21
  with J&J.
• 17:22
  It's around, so they've paid a dividend
• 17:26
  every year for the last 60 years.
• 17:31
  60, 60.
• 17:33
  Oh my, nearly half its life.
• 17:36
  So it was started 140 years ago
• 17:39
  and it's paid a dividend for the last 60 years.
• 17:42
  Well, on average, was the dividend?
• 17:44
  Oh, it changes because they pay out a portion of their earnings.
• 17:47
  So it's not like you pay a dollar a year.
• 17:50
  So it changes.
• 17:51
  Is there like an average or is there no point
• 17:53
  to even looking at it?
• 17:54
  It's kind of meaningless because
• 17:57
  if the earnings one year was 10 million
• 18:00
  and they paid out 60 percent
• 18:02
  and it was 100 million
• 18:04
  and they paid out 60 percent
• 18:05
  and it just depends on the number of shares.
• 18:06
  So it's quite like,
• 18:07
  it's not really a,
• 18:09
  like it doesn't really mean anything
• 18:11
  if that makes sense.
• 18:12
  Okay, that's a good job.
• 18:13
  Yeah, because when you're looking at a,
• 18:16
  yeah, when you're looking at a company
• 18:18
  you're best to look at.
• 18:19
  The dividends per share
• 18:21
  divided by the price
• 18:23
  and that gives you what we call a dividend yield.
• 18:26
  Hold on.
• 18:27
  Whoa, whoa, whoa.
• 18:29
  Dividend per share.
• 18:31
  What can you say that in?
• 18:32
  Yes.
• 18:33
  So the dividend per share
• 18:37
  divided by the share price.
• 18:39
  So would that be like say the,
• 18:40
  so say dividend per share
• 18:42
  would that be what say you own one share
• 18:45
  the dividend that you get from that?
• 18:47
  So like say it would,
• 18:48
  and but would that be dollar value
• 18:50
  or would that be percentage value?
• 18:52
  Dollar.
• 18:53
  So say, say your return for your dividend
• 18:55
  for one stock was two dollars
• 18:57
  then that's what you're talking about.
• 18:59
  Yes.
• 19:00
  And then you put that on top of the share price.
• 19:03
  So if the share price was $20,
• 19:06
  then you're getting a 10% dividend return,
• 19:10
  which what we call a dividend yield.
• 19:12
  So that's your return effectively
• 19:15
  in the form of a dividend.
• 19:17
  But that's not just the dividend right
• 19:19
  because there's also the change in the share price.
• 19:21
  Exactly.
• 19:22
  Yes.
• 19:23
  So if the share price is going up
• 19:24
  and the dividend stays the same amount
• 19:26
  in the dividend yield will come down.
• 19:28
  Yes.
• 19:29
  So the dividend yield isn't a set number,
• 19:31
  but it gives you an indication of like
• 19:33
  if I owned this stock
• 19:35
  and the share price did nothing,
• 19:37
  what would my return be?
• 19:38
  That's effectively what the dividend yield is having.
• 19:40
  Right.
• 19:41
  Oh, okay.
• 19:42
  And that's just basically like,
• 19:43
  okay, so what is the value
• 19:45
  or the return that I'll be getting on the stock
• 19:47
  at this current time?
• 19:49
  Yes.
• 19:50
  So like if you're choosing to invest in something
• 19:51
  or you're trying to look at an investment
• 19:53
  that you've already done,
• 19:54
  you might try and figure out your dividend yield
• 19:57
  so that you can be like,
• 19:58
  oh, okay.
• 19:59
  So my dividend yield is say 10%.
• 20:01
  And then also you would look at your,
• 20:03
  the change in the share price
• 20:04
  or all the value of that share price
• 20:05
  to figure out your total return basically.
• 20:07
  Yes.
• 20:08
  Yeah.
• 20:09
  And so you really need to...
• 20:10
  Oh, sorry.
• 20:11
  Are you part of me?
• 20:12
  I am.
• 20:13
  Yeah.
• 20:14
  It's also...
• 20:15
  I guess an added bonus
• 20:17
  in terms of the share price movement
• 20:19
  if that makes sense.
• 20:21
  Yeah.
• 20:22
  Because when you're investing in a dividend stock,
• 20:24
  you need to look at the share price,
• 20:26
  the change in the share price,
• 20:27
  and the dividend that you get
• 20:29
  because it makes up your total return.
• 20:31
  You can't just look at all the other.
• 20:32
  Because they're paying out part of...
• 20:34
  They're paying out part of the earnings.
• 20:36
  So you need to take that into account
• 20:39
  because they're actually returning that to shareholders.
• 20:42
  So when you're looking at a dividend share price,
• 20:46
  like for example, J&J,
• 20:47
  they're talking about right now.
• 20:49
  If you were figuring out what the total return
• 20:51
  from that share price would be,
• 20:53
  you would be looking at the change in the share price,
• 20:56
  as well as what they're paying back as a dividend,
• 20:58
  and you'd be adding this together basically.
• 21:00
  Yes.
• 21:01
  Yeah.
• 21:02
  The share price tracks earnings growth, really.
• 21:04
  And because a dividend company is paying out part of its earnings,
• 21:07
  then...
• 21:08
  You have to consider that.
• 21:09
  That's a consider that.
• 21:10
  Yeah.
• 21:11
  Because they could reinvest that
• 21:12
  and keep growing earnings,
• 21:13
  and then that would be reflected in the share price growth.
• 21:15
  So it's kind of...
• 21:18
  It's like...
• 21:19
  Oh, okay.
• 21:20
  Yeah, it's like management teams sitting there going,
• 21:22
  oh, do we reinvest?
• 21:23
  Do we pay it out?
• 21:24
  Like, okay, we'll pay out half,
• 21:26
  but then our share price is only going to grow half as much.
• 21:29
  Do you know what I mean?
• 21:30
  So then when you're investing,
• 21:31
  you've got to be like,
• 21:32
  okay, well, it's grown this much,
• 21:33
  but it's also paying this much in a dividend.
• 21:35
  Opposed to a company that doesn't have a dividend,
• 21:38
  and you're seeing the growth of that company moving more
• 21:41
  than say a dividend stock,
• 21:42
  but you've got to be like,
• 21:43
  no, I need to remember there's a dividend added on top of that.
• 21:46
  They give me the total return to then compare it
• 21:49
  to a non-dividend stock.
• 21:50
  Yes.
• 21:51
  Yeah.
• 21:52
  So you just need to take both into account.
• 21:54
  And sometimes the dividend payment
• 21:55
  might be really, really tiny
• 21:56
  and not really make the difference,
• 21:58
  but in other companies,
• 22:00
  it might be really big,
• 22:01
  so it might actually be quite a lot in terms of
• 22:03
  a greater portion of your overall return.
• 22:06
  So that's why a company that's paid a dividend for 60 years,
• 22:12
  like that is a pretty stable company.
• 22:15
  The management team hang out their earnings 60 years in a row,
• 22:20
  and we've gone through a lot of economic conditions,
• 22:25
  we've gone through a global financial crisis,
• 22:28
  we've gone through COVID,
• 22:30
  and they still pay a dividend.
• 22:31
  That's a pretty stable company,
• 22:33
  because the management team knows,
• 22:35
  but they wouldn't pay out the dividend
• 22:36
  if they weren't confident in the next year
• 22:38
  or the next two years in terms of the outlook of the business.
• 22:42
  So it's a pretty good sign,
• 22:45
  and it's what we call a dividend king.
• 22:48
  So I didn't make a sound up that.
• 22:50
  I hate that.
• 22:51
  I hate that it's called a king.
• 22:52
  Can we just call it a queen anyway?
• 22:54
  Dividend queen. Sure.
• 22:55
  Yeah.
• 22:56
  It's just a dividend.
• 22:59
  Queen.
• 23:00
  It's a queen.
• 23:01
  That's what I think is going up.
• 23:03
  This is when a company has had 50 consecutive years
• 23:07
  of paying a dividend.
• 23:08
  So the fact that J&J's had 60,
• 23:11
  it's like a queen of all queens.
• 23:13
  I think the red flag, though,
• 23:14
  would be if they announced tomorrow
• 23:16
  that they were going to stop paying the dividend
• 23:18
  because they paid it for so long,
• 23:20
  it's almost like shit.
• 23:22
  Yeah.
• 23:23
  Whereas if a company had just introduced a dividend
• 23:27
  and it only paid a couple of years of a dividend,
• 23:29
  and then it cut it,
• 23:30
  it's still bad to cut a dividend,
• 23:31
  but a company that has consistently paid one for so long,
• 23:35
  then cutting it is even a bigger red flag.
• 23:37
  Yeah.
• 23:38
  It would be warning bells for sure.
• 23:40
  Yeah.
• 23:41
  Yeah.
• 23:42
  But quite impressive,
• 23:43
  and there's only a elite group of companies
• 23:45
  that have actually achieved this dividend queen status.
• 23:48
  Thank you.
• 23:49
  Thank you for that.
• 23:50
  Really, really, really impressive.
• 23:52
  I wonder if that's so there would only be like a small handful of them.
• 23:55
  38 companies.
• 23:57
  In the world or in the S&P 500?
• 23:59
  38 companies, ever.
• 24:01
  So they might not be the S&P 500 anymore or...
• 24:03
  Shit.
• 24:04
  So there's not very many.
• 24:06
  No, so...
• 24:07
  Yeah, so pretty amazing.
• 24:09
  That's over 50 years,
• 24:11
  just quite incredible.
• 24:12
  Yeah.
• 24:13
  And some more fun facts for you.
• 24:15
  So they have grown...
• 24:16
  J&J has grown their revenue
• 24:18
  by 6% per year,
• 24:21
  every year for the last 20 years on average,
• 24:24
  which doesn't really sound like much,
• 24:26
  but I mean...
• 24:27
  For that long to continue to grow,
• 24:30
  and then they've grown their earnings even more,
• 24:33
  which is a really good sign of a healthy business,
• 24:35
  that their costs aren't growing as much as their revenue.
• 24:40
  That's their earnings have grown
• 24:42
  at about 8% per year over the last 20 years.
• 24:44
  Yeah, quite impressive.
• 24:46
  And that would be from acquiring new brands
• 24:49
  and growing existing brands.
• 24:51
  And just like population growth,
• 24:54
  and then price increases,
• 24:55
  and then new products,
• 24:56
  yeah, all those kind of things.
• 24:57
  Like some people might hear that and be like,
• 24:59
  oh, 6% that's nothing.
• 25:00
  But to do it consistently for over 20 years,
• 25:04
  it's pretty impressive.
• 25:06
  You're also not saying this is a very high growth company
• 25:09
  that is producing outlandish crazy results
• 25:14
  and it's skyrocketing up and just share price.
• 25:17
  Like you're saying it's been a consistent,
• 25:19
  consistently successful dividend stock
• 25:23
  that has managed to continually pay a dividend
• 25:27
  throughout a huge amount of economic changes,
• 25:30
  which in itself is an amazing thing.
• 25:32
  Yeah, it's like the stable boyfriend.
• 25:34
  You know, the husband material.
• 25:36
  It is kind of the boring one to be honest.
• 25:38
  Yeah.
• 25:39
  It's the nice guy.
• 25:41
  It's the nice guy.
• 25:42
  Yeah, yeah, yeah.
• 25:43
  Not the high-action, like bad boy.
• 25:45
  Yeah, yeah, yeah.
• 25:46
  It's like going to like blow your life off.
• 25:48
  Blow your life off.
• 25:49
  Yeah.
• 25:50
  Yeah.
• 25:51
  So again, everyone has a different time.
• 25:54
  Yeah, exactly.
• 25:55
  Exactly.
• 25:56
  I think we'll move Don from the motorbike guide.
• 25:59
  Who knows?
• 26:00
  Oh, the motorbike guys are fun though.
• 26:02
  But this is not a motorbike guide just to confirm, right?
• 26:04
  No.
• 26:05
  This is like, you know, maybe a part-time librarian
• 26:08
  in the weekend.
• 26:09
  Yeah.
• 26:10
  Probably place like social, I don't know, golf.
• 26:14
  Yeah.
• 26:15
  And actually not even golf,
• 26:16
  because he's his nerdyer than that.
• 26:18
  Like volunteers.
• 26:19
  But like, and a really good genuine way.
• 26:22
  Like you take him home to your mom.
• 26:24
  Yeah, all that kind of stuff.
• 26:25
  Yeah, weird shoes.
• 26:26
  Yeah.
• 26:27
  And you're having pretty,
• 26:28
  you're having pretty vanilla sex, yeah.
• 26:29
  Yeah.
• 26:30
  Yeah, yeah, yeah.
• 26:31
  It's missionary for sure.
• 26:32
  Pretty missionary.
• 26:33
  Yeah.
• 26:34
  I really hate this analogy work though.
• 26:38
  It does.
• 26:39
  I just can't wait for me from talking about Johnson and Johnson
• 26:41
  and one of the most probably stable boring companies
• 26:43
  and two, six.
• 26:44
  Yeah, but hey.
• 26:45
  What else about this company is worth knowing?
• 26:47
  Yes.
• 26:48
  So, um, the good, the interesting thing with this company
• 26:52
  is that I was kind of looking at how she priced it done over,
• 26:55
  you know, the past kind of we while.
• 26:57
  And it seems that it's share prices really kind of outperformed
• 27:02
  and times when, you know, the market,
• 27:05
  the market doesn't do well.
• 27:07
  Like the overall stock market, which again kind of adds
• 27:10
  to that really defensive nature of the business.
• 27:14
  And my, my thinking around this is that, you know,
• 27:17
  when the stock market isn't doing well,
• 27:19
  it's because people are concerned about the future.
• 27:21
  People are concerned about the economy.
• 27:23
  And we've seen that this year.
• 27:24
  You know, we've seen that the first half of 2022.
• 27:27
  There was all this discussion around,
• 27:29
  we're going to a recession, we've got high inflation,
• 27:32
  high interest rates, you know,
• 27:33
  what does that mean for the consumer and people,
• 27:36
  you know, spending habits and all that.
• 27:38
  And when we start hearing those things, you know,
• 27:43
  there's a bit of a rotation that goes on in the stock market.
• 27:46
  And people kind of pull out their money
• 27:50
  from these high growth,
• 27:52
  really high octane Harry Styles kind of stocks.
• 27:56
  And they put them into the more kind of boring ones,
• 28:00
  the real missionary kind of companies like Johnson Johnson.
• 28:03
  We need to think of an example of that, by the way.
• 28:06
  Like who, what's a boring celebrity?
• 28:10
  We need to think of that and maybe come back to the drawing board.
• 28:14
  Because I really like the, you know, Harry Styles got it.
• 28:17
  So, very unpredictable, very all over the show,
• 28:21
  you know, like hot and exciting.
• 28:24
  What would be the alternative?
• 28:26
  Like I could Joe Jonas,
• 28:28
  that he seems like a really nice guy.
• 28:30
  Yes, oh my god, you're so right.
• 28:32
  A Joe Jonas, not a net,
• 28:33
  because net could probably be more of a Harry Styles,
• 28:35
  but Joe, boring and stable.
• 28:37
  Love that.
• 28:38
  I mean, I'm sure he's a lovely guy,
• 28:40
  but that even that comment makes you so right.
• 28:45
  So, when there's kind of times of panic or uncertainty,
• 28:49
  you want to go for the stable guy.
• 28:51
  And so, there's a lot of,
• 28:53
  that's kind of one of the reasons why the likes of Johnson Johnson does well
• 28:57
  when the market, the overall market has a bit of a pullback or a bit of a fall.
• 29:02
  It's because people, investors are like,
• 29:04
  oh, I want to invest in something that's really stable,
• 29:06
  that's going to keep growing even though the market,
• 29:08
  the economy is uncertain.
• 29:12
  And so, Johnson Johnson,
• 29:14
  because we talked about, you know,
• 29:16
  it's got 100 brands, it's really diversified,
• 29:19
  it's growing,
• 29:20
  it's revenue, you know, 6% of the last,
• 29:23
  you know, 6% each year over the last 20 years,
• 29:26
  this is a stable company.
• 29:27
  So, there's all,
• 29:28
  it's what we call a flight to safety.
• 29:30
  And it's when people freak out,
• 29:32
  they cash up the really high-octane stuff,
• 29:36
  and they kind of reassess their portfolios.
• 29:39
  And it's happening on like a,
• 29:41
  on a massive scale.
• 29:42
  So, this is why Johnson Johnson's share prices outperformed
• 29:48
  when we hit those kind of road bumps, I guess.
• 29:50
  And it's like, in 2008,
• 29:52
  when we had the global financial crisis,
• 29:55
  it's in 2001, 2002,
• 29:57
  and we had the dot-com bubble,
• 29:59
  which was another really big market correction.
• 30:01
  So, these are times when Johnson Johnson is actually outformed the market.
• 30:07
  And again, it just adds to that defensiveness,
• 30:10
  the defensive nature of the business.
• 30:12
  So, over the last 22 years,
• 30:14
  if you had owned Johnson and Johnson,
• 30:16
  you would have made a 270% return.
• 30:19
  And if you include the dividends that you would have got over that time,
• 30:22
  that's a 360% return of the last 22 years.
• 30:27
  So, that's nearly 100% difference if you had those dividends.
• 30:31
  And this is kind of coming back to what we're talking about before,
• 30:33
  around you really need to make sure you're including that
• 30:36
  when you're looking at your overall return of any dividend stock,
• 30:41
  is to make sure that you include that dividend return,
• 30:44
  because over the long term,
• 30:46
  it can make such a huge difference.
• 30:49
  I don't know if Johnson and Johnson's a company that I would want to invest in,
• 30:52
  to be honest, it doesn't really like make me feel overly excited.
• 30:57
  It's really good to have that mentality,
• 30:59
  because you're young, you've got a long time,
• 31:01
  in terms of reaching your investing goals,
• 31:03
  therefore, you can take more risk,
• 31:06
  but I guess there's people out there who might have a bit more of a shorter investment goal,
• 31:11
  and want something a bit more stable,
• 31:13
  or they might just not be that kind of risky in nature,
• 31:17
  and want to invest in stocks,
• 31:19
  but not like two high growth stocks,
• 31:22
  they want to invest in maybe a bit more stable stocks,
• 31:25
  and so this is why this would be quite good,
• 31:27
  in terms of a more lower risk approach to the stock market.
• 31:31
  Dipping your toes in, but not like jumping full into the deep end,
• 31:35
  head first off a diving board.
• 31:37
  Or just good diversification.
• 31:39
  Have some dividend stocks,
• 31:40
  but then also have some high growth ones,
• 31:42
  because like I said, when the market has a little wobble,
• 31:44
  or people get a bit freaked out,
• 31:46
  these ones are the ones that tend to outperform in those periods.
• 31:50
  It's just all about diversification,
• 31:54
  when it comes to investing.
• 31:56
  So we're giving you options.
• 31:59
  We're giving you so many options.
• 32:01
  There is another thing that I found when I was looking at this company,
• 32:05
  and it's actually one thing that,
• 32:08
  if you can find this information,
• 32:10
  it is in the annual report,
• 32:11
  but you do kind of have to have a bit of a look,
• 32:14
  is that this company is really innovative,
• 32:17
  and I think that shows,
• 32:18
  and the fact that they have to,
• 32:19
  they've been around for so long,
• 32:21
  they've grown,
• 32:22
  they've grown, they've grown,
• 32:23
  they've only grown,
• 32:24
  you have to keep innovating.
• 32:25
  But this is contributed,
• 32:26
  they spend in terms of their percentage of revenue
• 32:30
  on what we call research and development,
• 32:33
  which is new products and new brands.
• 32:37
  They spend about 16% of their revenue,
• 32:41
  purely on new product development.
• 32:44
  And that is really quite high.
• 32:47
  And if you think of a company this size,
• 32:50
  they have about $100 billion of revenue.
• 32:53
  So that's about 16 billion dollars of revenue
• 32:57
  that they're spending each year
• 32:59
  on just new products and bringing new products to market.
• 33:02
  The company this size,
• 33:04
  putting all that resource into new products
• 33:06
  and bringing new products to market,
• 33:08
  and having massive teams behind them,
• 33:10
  just makes them continue to be leaders in their field.
• 33:13
  So it's sort of like Joe Jonas investing
• 33:16
  in like many different new sweaters to play.
• 33:21
  He's like, I'm strange side sport on.
• 33:24
  He's like, look, I really want to keep with this nice guy persona.
• 33:28
  You know, I really want to solidify myself.
• 33:30
  It's the nice guy.
• 33:31
  So I've got to look and play the part
• 33:34
  and to keep innovating and making sure that I am the best nice guy.
• 33:38
  Yeah.
• 33:39
  Yeah.
• 33:40
  Yeah.
• 33:41
  I'm sorry to be here.
• 33:43
  Yeah, picking up with the girls on the high.
• 33:45
  And I bring new necklaces.
• 33:47
  And I'm like dating 10 people at one time.
• 33:50
  What's up?
• 33:51
  Is this the company that you've ever invested in?
• 33:53
  Not directly, but through ETFs.
• 33:55
  Yes, I have.
• 33:56
  Yeah, because it's in the S&P 500 as well.
• 33:58
  So if you're investing in kind of the US stock market,
• 34:00
  then you will be investing in J&J
• 34:02
  if you're invested in a ETF.
• 34:04
  Amazing.
• 34:05
  Oh, before we go.
• 34:08
  One more thing.
• 34:10
  I can't believe I didn't mention this.
• 34:12
  Sorry.
• 34:13
  One thing is that they have announced
• 34:16
  the end of last year that they're going to potentially spin off
• 34:19
  their consumer products division of the business
• 34:22
  because they don't believe that it's kind of getting the valuation
• 34:25
  or the recognition from investors that it deserves.
• 34:27
  And it would be better off as a standalone business.
• 34:30
  So we.
• 34:31
  What does that mean?
• 34:32
  So that means that it's.
• 34:34
  So they've got the three divisions that we talked about.
• 34:36
  The pharmaceutical medical devices and the consumer products.
• 34:40
  And so if that's going to spin off that third,
• 34:44
  which it's about 15% of sales.
• 34:47
  So about 15 billion dollar business.
• 34:49
  And you know, they'll set it up as a separate company.
• 34:52
  So it'll be, it'll be a publicly listed company.
• 34:55
  I don't know what it'll be called.
• 34:57
  I don't think they've announced it,
• 34:59
  but it'll have its own management team on sales.
• 35:01
  Effectively just carved out as its own individual company.
• 35:05
  And history shows it's spin-offs actually do really well
• 35:09
  once they've become their own company because they're not.
• 35:12
  They've got the dedicated team.
• 35:14
  They've got investors that want to invest in that standalone company.
• 35:19
  It's got new investors, new interest.
• 35:22
  And it's kind, it's not just like the forgotten middle trial,
• 35:25
  but you know, part of a bigger family.
• 35:27
  It's like out on its own, you know, ready to make its mark on the world.
• 35:31
  So it's, yeah, history shows it's spin-offs tend to do better once they're kind of separated
• 35:35
  from from large businesses.
• 35:37
  So watch the space.
• 35:39
  So they're emancipating their parents basically.
• 35:42
  Yes, the middle trial is leaving the family.
• 35:45
  Yes.
• 35:46
  Hey, well, I hope you have a fab sleep vac.
• 35:48
  I will.
• 35:49
  And you enjoy.
• 35:50
  And you enjoy your day.
• 35:52
  Talk to you in about 12 hours.
• 35:54
  Sleep well and I'll talk to you soon.
• 35:57
  Bye.
• 35:58
  Thank you so much for joining us for today's episode of Raising the Curve.
• 36:02
  Please subscribe and leave a review on what ever platform you're listening on.
• 36:06
  Also, I'd love for you to share this podcast with anyone you think would benefit from it.
• 36:10
  For more information about the curve and how you can learn more,
• 36:13
  head to thecurve.co.nz or find us on socials at the underscore curveNZ.