Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Should I Sell Some Johnson & Johnson & Add Novartis ?
Old 06-13-2014, 09:11 PM   #1
Full time employment: Posting here.
ownyourfuture's Avatar
 
Join Date: Jun 2013
Posts: 512
Should I Sell Some Johnson & Johnson & Add Novartis ?

**Shares Are Held In A Regular Taxable Account**

I bought my first shares of JNJ in early 2002.
Since then I've reinvested the dividends & bought more when I thought it was oversold.

I now have 602 shares valued around 61-k

At any given time, I hold between 17 & 20 dividend paying stocks in my portfolio.

About a year ago, for diversification purposes, I came up with a new rule for my portfolio.

Anytime one of my holdings hits $20,000.00 or more, I discontinue adding any 'new' money to them. *This includes dividend reinvestment*

Obviously, JNJ was well past this point when I decided to address portfolio diversification.



JNJ vs NVS: A brief comparison.

Both are mega cap healthcare related stocks.

Both pay a nice dividend. JNJ 2.70% NVS 3.10%

JNJ has an AMAZING record of 51 straight years with dividend increases.
JNJ is the clear winner of this category

Dividend payout ratio: JNJ 47% NVS 52%

Finally, I like to use a basic 5 year chart (including the s&p 500) when comparing 2 companies.

NVS Basic Chart | Novartis AG Common Stock Stock - Yahoo! Finance



As you can see, NVS dominates JNJ by a good 50% here, while also topping the s&p 500 nicely.

IMHO Novartis is the JNJ of Europe & I think my plan is a good one.

Your thoughts.........
__________________

__________________
ownyourfuture is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-14-2014, 08:59 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,616
I am curious about your $20K "rule". That would mean with a a $2 million portfolio that you would have around 100 separate stock positions. Of course, if things doubled, you have 50 positions with $40K each.

In the end, you would kind of end up with an index fund anyways.

To answer your question: Yes, you should sell some JNJ and buy some Novartis. While you are at it, you might as well buy a few other stocks, too. If you like big pharma, there are many of them. Get them all.
__________________

__________________
LOL! is offline   Reply With Quote
Old 06-14-2014, 10:28 AM   #3
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,705
I might be tempted to hold the JNJ and invest dividends in Novartis. Maybe sell enough JNJ to establish a starting position in NVS.
__________________
target2019 is offline   Reply With Quote
Old 06-14-2014, 11:03 AM   #4
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
I've never heard of a 20K rule but I am aware of a 'no more than 4% per individual stock' rule. Under that rule unless if you have more than 1.5 mil invested you have too much in JNJ.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 06-14-2014, 11:36 AM   #5
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,038
I own both JNJ and NVS. JNJ has grown to be one of my largest positions. The downside with NVS: slow dividend growth, dividend paid in Swiss Francs so subject to the whims of the currency market, 35% withholding tax on the dividends (which can be recouped at tax time with a foreign tax credit).

Would I sell JNJ to buy NVS? It depends. My cost basis on JNJ is pretty low, so I would not sell JNJ, because even on LTCGs I pay close to 35% in income taxes (20% federal, 3.8% medicare surtax, 11.3% state). But if I was in a low tax bracket where LTCGs could be taxed very little and/or I had some JNJ lots with a high cost basis, then sure, I'd sell some and buy NVS.
__________________
FIREd is offline   Reply With Quote
Old 06-14-2014, 05:49 PM   #6
Full time employment: Posting here.
ownyourfuture's Avatar
 
Join Date: Jun 2013
Posts: 512
Thanks for the replies.

ATTN LOL!
"I am curious about your $20K "rule". That would mean with a a $2 million portfolio that you would have around 100 separate stock positions. Of course, if things doubled, you have 50 positions with $40K each"

The total portfolio is about $408,000.00 I should have mentioned this in the original post

The rest of your post was mostly sarcasm, so I'll disregard it.

ATTN target2019
"Maybe sell enough JNJ to establish a starting position in NVS"

That's what I plan on doing

ATTN Bikerdude
"I've never heard of a 20K rule but I am aware of a 'no more than 4% per individual stock' rule. Under that rule unless if you have more than 1.5 mil invested you have too much in JNJ"

The total portfolio is about $408,000.00
So you & I both agree that I have too much in JNJ

ATTN FIREd
"JNJ has grown to be one of my largest positions. The downside with NVS: slow dividend growth, dividend paid in Swiss Francs so subject to the whims of the currency market, 35% withholding tax on the dividends (which can be recouped at tax time with a foreign tax credit)"

JNJ is my largest position by far. I can understand the downside issues you mentioned, but capital appreciation is also important to me & the bottom line is that NVS has outperformed JNJ by a substantial amount (at least in the last 5 years)

"My cost basis on JNJ is pretty low, so I would not sell JNJ, because even on LTCGs I pay close to 35% in income taxes (20% federal, 3.8% medicare surtax, 11.3% state)"

I'm in a lower tax bracket, (no medicare surtax) so this isn't as much of an issue for me.

"If I had some JNJ lots with a high cost basis, then sure, I'd sell some and buy NVS.

Wouldn't any shares you sold go by the 'First In, First Out' method. Isn't that an IRS rule ?
I'd love to 'pick & choose' which 'lots' to sell. Am I missing something ?
__________________
ownyourfuture is offline   Reply With Quote
Old 06-14-2014, 06:49 PM   #7
Recycles dryer sheets
 
Join Date: Jul 2012
Posts: 50
You can specify the lot you're selling at the time of sale.
__________________
jarts98 is offline   Reply With Quote
Old 06-14-2014, 07:35 PM   #8
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,038
Quote:
Originally Posted by ownyourfuture View Post
Wouldn't any shares you sold go by the 'First In, First Out' method. Isn't that an IRS rule ?
I'd love to 'pick & choose' which 'lots' to sell. Am I missing something ?
You can pick and choose which lot to sell. I use the "Specific Identification" method instead of FIFO. If you keep good records, you should be able to figure out the cost basis of your various purchases and designate the proper lots when you sell.
__________________
FIREd is offline   Reply With Quote
Old 06-14-2014, 09:16 PM   #9
Full time employment: Posting here.
ownyourfuture's Avatar
 
Join Date: Jun 2013
Posts: 512
Thanks jarts98 & FIREd
I had no idea you could choose.

Just goes to show, one never stops learning.
__________________

__________________
ownyourfuture is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
johnson ranch queen creek AZ. chas57006 Travel Information 2 04-30-2012 06:52 PM
Kudos to Jack Johnson Andy R Other topics 3 06-11-2010 09:24 PM
Should I add more insulation in my attic?? thefed Other topics 4 05-28-2008 11:33 AM
Abby Johnson leaves Fidelity's board but... Nords FIRE and Money 0 12-25-2005 11:00 AM

 

 
All times are GMT -6. The time now is 02:37 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.