Motley Fool: Investors can make boring work
In August 2023, Johnson & Johnson spun off its “boring” consumer health brands such as Neutrogena, Listerine, Benadryl, Tylenol, Aveeno and Band-Aid into a company called Kenvue (NYSE: KVUE).
The spinoff allowed J&J to be a potentially higher-growth company, specializing in medical devices, diagnostics and pharmaceuticals – leaving the consumer basics to Kenvue.
But sometimes, boring is better, especially for investors focused on preserving capital and generating reliable dividend income.
Kenvue’s offerings tend to do well no matter what the economy is doing, since changing mouthwash habits may be low on the list of household budget cuts compared to spending less on dining out or vacations.
So far, Kenvue, with a recent market value of $44 billion, has emerged as an excellent dividend stock, with a recent dividend yield of 3.6%.
In August, CEO Thibaut Mongon noted: “We are on track to deliver the financial targets we set for 2024, and while we are in the early days, our work to transform Kenvue into a bolder, more agile organization focused on profitable growth is producing results.”
Management is planning to accelerate growth by investing 20% more in its brands than last year. Kenvue may not be a fast grower, but it should be a dependable income generator for patient long-term investors. (The Motley Fool owns shares of Kenvue and recommends its stock and options.)
Ask the Fool
Q: Which Fortune 500 companies are headed by women? – V.T., Philadelphia
A: As of mid-September, there were 52: Advanced Micro Devices, Automatic Data Processing, Bath & Body Works, Best Buy, CDW, Celanese, Centene, Citigroup, Clorox, Cummins, CVS Health, Dick’s Sporting Goods, Duke Energy, DuPont de Nemours, Elevance Health, Equinix, Expedia Group, Federal National Mortgage Association (“Fannie Mae”), Fidelity National Information Services, Foot Locker, Franklin Resources, General Dynamics, General Motors, Graybar Electric, Hershey, Insight Enterprises, JetBlue Airways, Jones Financial (Edward Jones), Kinder Morgan, Land O’Lakes, Lincoln National, Lumen Technologies, Northrop Grumman, Occidental Petroleum, Oracle, Otis Worldwide, Parker-Hannifin, PG&E, Progressive, Reliance, Ross Stores, Science Applications International, Sherwin-Williams, Taylor Morrison Home, Thrivent Financial for Lutherans, Teachers Insurance and Annuity Association of America (TIAA), United Parcel Service, Vertex Pharmaceuticals, Voya Financial, Williams-Sonoma, Yum China Holdings and Zoetis.
Interestingly, a 2016 report from the Harvard Business Review noted that “going from having no women in corporate leadership … to a 30% female share is associated with a one-percentage-point increase in net margin – which translates to a 15% increase in profitability for a typical firm.”
And a bit of trivia from Bloomberg: It was only last year that female CEOs outnumbered male CEOs named John.
Q: What are “day” and “GTC” orders? – M.K., Lexington, Kentucky
A: When you place a “market” order to buy or sell a security via your brokerage, it will be filled as soon as possible.
Alternatively, you can place a “limit” order, which is only filled at a specified price or better; you can designate limit orders as good for that day only (a “day” order), or good till canceled (“GTC”).
GTC orders remain in effect until they’re executed, you cancel them or a brokerage-imposed time limit expires.
My Smartest Investment
My best financial move was saving at least 10% of all my income. – A.M., online
The Fool responds: That’s smart indeed.
After all, most of us need to be saving and investing for our futures if we want to buy a home, pay for our kids’ educations and/or retire comfortably. (Don’t assume that Social Security will be sufficient. As of August, the average monthly retirement benefit was just $1,920 – or about $23,000 annually.)
Saving around 10% of your income is a common bit of advice, but it’s not right for everyone.
If you didn’t start saving early and retirement is just a decade or two away, you may need to be socking away much more than 10%. And if you’re still quite young, such as in your 20s, you might get away with saving less for now – but if you can save 10% or more, you may end up able to retire early.
It’s also important to be investing that money effectively. Dollars that you won’t need for at least five, if not 10, years are likely to grow fastest in the stock market. A simple, low-fee S&P 500 index fund can be all you need for your wealth to grow along with the U.S. economy.