Investors pay careful attention to Ken Griffin’s moves for one major reason: The founder of Citadel has an extremely solid track record of success. Citadel, which oversees $69 billion, in January was named the most profitable hedge fund ever, winning this accolade for the fourth straight year.
Griffin’s funds also carried their success through the first half of this year, with positive returns across strategies, according to a recent CNBC report. The billionaire uses a variety of techniques, including focuses on in-depth research and managing risk, in order to deliver the strongest possible returns in any market environment.
With all of this in mind, let’s consider one of the billionaire’s latest moves. He boosted his stake in one particular Dividend King by 146% in the first quarter. Here’s why it’s an ideal choice for investors who are uncomfortable with risk.
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A name you may know well
This particular stock is a name you might know well, thanks to various consumer health products the company used to sell — from Band-Aid bandages to Tylenol. It spun off that business as Kenvue a few years ago in order to focus on its two core businesses of pharmaceuticals and medtech. I’m talking about Johnson & Johnson (JNJ 0.82%).
In the first quarter, Ken Griffin increased his position in J&J by 146% and now holds 1,930,976 shares. The stock, at 0.08% of the portfolio, isn’t a huge position — but its presence there since 2017 suggests Griffin recognizes J&J as a key long-term winner.
Today’s Change
(-0.82%) $-2.12
Current Price
$256.98
Key Data Points
Market Cap
Day’s Range
$255.52 – $261.30
52wk Range
$154.80 – $269.43
Volume
6.5M
Avg Vol
8.2M
Gross Margin
67.96%
Dividend Yield
2.04%
Now, let’s talk about why this stock is such a great holding for risk-averse investors. First, it’s important to consider the Kenvue spinoff. Though J&J may have become a household name thanks to its consumer products, consumer health actually wasn’t a huge growth driver for the company. Pharmaceuticals — known as the innovative medicine business — and medtech offered greater growth potential, so J&J wanted to devote more resources to these units.
The bet has already proven to be a smart one, as revenue has climbed in recent quarters. The latest one is the perfect example. Innovative medicine sales jumped 11%, while medtech sales advanced more than 7%. And overall worldwide sales increased nearly 10% to more than $24 billion.
28 billion-dollar platforms
One element that makes J&J a low-risk stock is the fact that this growth isn’t driven by a product or two. The pharma giant has 28 platforms or products that bring in at least $1 billion annually. And J&J is on track to increase this number. The more blockbusters a company has, the less vulnerable it is when a particular product loses exclusivity.
J&J has proven its ability to overcome such challenges. The company’s immunology blockbuster Stelara saw the impact of this last year, yet J&J’s other top drugs compensated, and the company even said its performance placed the loss of exclusivity “in the rearview mirror.” In spite of a 41% drop in Stelara sales, total sales advanced 6% last year.
So, investors can count on a solid portfolio of products delivering growth at J&J. It’s also important to note that medical treatments are essentials, so even during difficult economic times, sales of these types of products generally hold up well.
Now here’s the second major element that makes J&J the ideal stock for cautious investors. The company is a Dividend King, meaning it’s increased these payments to shareholders for more than 50 consecutive years. This shows a true commitment to dividend growth. That, along with J&J’s huge level of free cash flow, supports the idea of an increasing dividend over the years to come.
JNJ Free Cash Flow data by YCharts
J&J pays a dividend of $5.36 per share, representing a dividend yield of 2% and surpassing the 1.1% yield of the S&P 500. This focus on dividends is fantastic because it offers investors a recurrent source of income — regardless of the performance of the market or even J&J stock.
This combination of dividend and business strength makes this Ken Griffin stock a great pick for a broad range of investors — and a dream stock for those who are risk-averse.