If You'd Invested $1,000 in Johnson & Johnson (JNJ) Stock 5 Years Ago, Here's How Much You'd Have Today

Key Points

• Johnson & Johnson's performance over the past five years has been disappointing.

• Investors didn't lose money, though.

• Its future could be bright, and it's a solid dividend payer.

• 10 stocks we like better than Johnson & Johnson ›

How much would your $1,000 investment be worth if you'd bought Johnson & Johnson (NYSE: JNJ) five years ago? It would be worth $1,359. Sure, you gained money instead of losing it, but know that the $1,359 reflects an average annual growth rate of just 6.3%.

That's far less than the average annual gain of close to 10% for the S&P 500 index. Worse still, the S&P 500 has had a great run over the past five years, averaging annual gains of 14.7% -- enough to turn $1,000 into $1,989.

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So yeah, that's a bummer. But whether you're already a shareholder or are just thinking about becoming one, what matters most is how Johnson & Johnson will perform going forward. And on that count, things are promising -- though not without some risks.

For starters, Johnson & Johnson is a dividend-paying stock, with a recent dividend yield of 2.9%. Better still, it's been growing its payout at a respectable rate of around 5%, on average, over the past five years. Its most recent increase, of 4.8%, was its 63rd consecutive annual increase.

Johnson & Johnson is a giant in the pharmaceutical and medical device realms -- with a recent market value near $430 billion. It's growing, too, with second-quarter revenue up 5.8% year over year and earnings rising 18%. Management noted: "Our portfolio and pipeline position us for elevated growth in the second half of the year, with game-changing approvals and submissions anticipated in areas like lung and bladder cancer, major depressive disorder, psoriasis, surgery and cardiovascular..."

One issue to keep an eye on is a legal one -- the company is facing a class action suit over talcum powder, and until it's resolved, we won't know how much it may have to pay.

Meanwhile, Johnson & Johnson's stock is appealingly priced at recent levels, with a recent forward-looking price-to-earnings (P/E) ratio of 15.8 near its five-year average of 15.6. Give it some consideration if you're looking for a long-term income-producing investment.

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Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.