Johnson & Johnson Vs. The S&P 500


As a new young investor, I find myself constantly reviewing many different stocks and comparing their performance against the S&P 500 index. In my last article, I researched DNP Select Income Fund (NYSE:DNP) and found that it had outperform the S&P 500 index in the last 29 years since it was founded. My analysis of DNP Select Income Fund can be found here. Every investor are looking for the next investment that will provide them a decent return in the future. The true is that very few companies outperform the market over a long period of time. An example of this was shown in the looking back at the Nifty Fifty stocks that were once deemed a solid buy and hold growth stocks back in 1960 – 1970. The lesson learned I took from the Nifty Fifty stocks was that even if a company is a large corporation and has a long performance track record, there are no guarantee it will continue to outperform the market much less be in business the next fifty years. For this reason, the number of companies that outperform the stock market in the long run are very little.Johnson & Johnson (NYSE:JNJ) is one of those companies that has consistently outperform the market in any given economic condition. This article will provide evidences that show Johnson & Johnson has been outperforming the S&P500 since 1944 and why this stock need to be in everyone’s portfolio.

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DNP Select Income Fund Vs. S&P 500 Index Fund


In the search for better stock performance from my own personal portfolio, I decided to research more into this income fund. The reason for my interest was due to a colleague of mine at work who recently recommended me a fund called DNP Select Income Fund (NYSE:DNP). His investment thesis into DNP was due to the fund providing monthly income at a very little cost. He liked the fund so much that he invested bi-weekly through his 401k plan. This sparked my interest in researching this fund and see if it could be a better investment than an investment in the Vanguard S&P 500 ETF (NYSEARCA:VOO).

DNP Select Income Fund

To make an assessment of the two funds, I went on Schwab website to research about DNP and VOO in more depth. According to Schwab, DNP Select Income Fund is a close-ended investment company that focuses investing in various sectors within the utilities space, while providing long-term growth of income. This fund has been around since January 1987. Below is a summary of the fund information.

Source: Charles Schwab & Co., Inc

From the Fund Profile, DNP Select Income Fund’s total holdings currently stand at 118. The top 10 holdings within this fund are made up of mostly energy companies and the top holdings take up 39.6% of the entire total assets. DNP top 10 holdings can be found in the figure below.

Source: Charles Schwab & Co., Inc

DNP is also actively managed to follow the U.S Utilities indexes. Since it is actively managed, the net expense ratio is higher than those of passively managed funds such as the Vanguard S&P 500 Index Fund ETF. The key information from DNP’s fund profile I found was the annual report net expense ratio which was 1.03%. This will be a key information to use to assess the overall performance against other funds. The second information I found from researching DNP was the performance track record for the last 10 years. Below is the fund’s overall performance growth since 2006 with a $10,000 initial investment.

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