The time is now, to be as aggressive as ever, investing in dividend stocks to grow your passive income. Our goal is to reach financial freedom by building a growing dividend income stream. We aren’t going to reach this coveted end game by leaving our cash on the sidelines. Like Lanny, I am finally committing to a consistent, weekly purchase strategy. There is one twist, however. My wife and I are going to buy Johnson & Johnson every week! This article will explain why.

The Benefits of Investing Consistently

We all know the famous saying. Its about time in the market, not timing the market. That saying holds a lot of weight, given the current state of the stock market. When was the last time the stock market had several consecutive down days? It was about this time last year, when the market collapsed as the COVID-19 pandemic sent shockwaves through the world.

Since the bottom in 2020, the stock market has only gone in one direction…up. You want to know what is crazy though? Let’s take a step back and look at the trend of the S&P 500 over the 5 years. That’s right, the stock market has soared. Even after the market drop in 2020.

Want to take a step even further back? Let’s increase the length of time the chart shows. Look at the S&P 500 since the 1980s. Again, you guessed it, the trend is upwards.

This just reinforces the importance of investing as much capital, as possible, over time. Invest with conviction and do it consistently. 10 years from now, you won’t remember the price you paid for an investment today. Instead, you will be smiling and thanking your past self to taking these important steps and buying income producing assets.

Want an example of executing a successful, consistent investing strategy? Look no further than the other Diplomat, Lanny. Since mid-2020, Lanny and his wife have been purchase 3 shares weekly of Vanguard’s High-Dividend Yield ETF (VYM).  Now, their position has grown to over $10,000 each! That’s insane.

The growth is due to adding 3 shares (between $250-$300 per week) and price appreciation. When they began this strategy, VYM was trading around $80/share. Today, the ETF is trading at over $100/share. Insanity.

I’m very jealous, to be honest. He is enjoy the best of both worlds. His cost basis is much lower than the current price, since he has been adding weekly and slowly building his position. Further, he has added some SERIOUS dividend income as a result of this strategy.

Hopefully this example shows why consistency is so important. Now, it is my turn. I’m ready to start investing in a consistent investment on a weekly basis and build my position slowly over time. There is one twist, however. I’m not going to purchase shares of VYM. Rather, I am going to purchase shares of one of our favorite dividend stocks. One of the kings in the dividend growth investing community.

My Choice: JOhnson & Johnson (JNJ)

The big reveal. My wife and I will be investing weekly in Johnson & Johnson (JNJ).

It isn’t just about the stock metrics (which I will discuss later). This is a company that is one of the greatest dividend growth stocks. Johnson & Johnson has one of the strongest brand portfolios. The list includes: Neutrogena, Aveeno, Rogaine, Tylenol, Motrin, Zyrtec, Benadryl, Sudafed, Listerine, Band-Aid, and others.

In addition to the long list of popular brands, we can officially add a COVID-19 vaccine to the list. We all know the story by now. Johnson & Johnson’s single-shot vaccine was approved for use, helping even more people get vaccinated.

Truth be told, it is shockingly underrepresented in my dividend stock portfolio. I own 18.7 shares while my wife owns 22.7 shares. That’s just over 1% of our overall portfolio. In the grand scehme of things, that’s really not that large of a position!

Johnson & Johnson’s Valuation is Right

We are always on the lookout for undervalued dividend growth stocks. We use 3 simple metrics to help us find stocks to by. The three metrics are:

1.) P/E Ratio less than the S&P 500 (Valuation)

2.) Dividend Payout Ratio less than 60% (Dividend Safety)

3.) Dividend Growth & History of Increasing Dividends

Johnson & Johnson is unique in the sense that their valuation always seems to be trading at a discount to the market. In my mind, the company’s P/E ratio is consistenyl between 16x – 20X. JNJ is never the most expensive or the cheapest stock in the market.

Of course, that’s just my hunch. Let’s put the company’s actual metrics through our stock screener. At the time of this article, Johnson & Johnson is trading at $160.77 per share (3/17/21). The company’s forward average earnings estimate is $9.51 per share and their annual dividend is $4.04 per share. Let’s see how the company stacks up:

1.) P/E Ratio: 16.91X. PASS

2.) Payout Ratio: 42.4%. PASS

3.) Consecutive Dividend Increases: 58 Years. Pass

5 Year Average Dividend Growth Rate: 5.22%. Pass

That’s right, this Dividend King (50+ consecutive dividend increases) performs very well in our stocks screener. At this price, Johnson & Johnson is a buy today, tomorrow, next week, and most likely, every month this year. That is why I am going to start purchasing 1 share of Johnson & Johnson every week.

The Purchase Plan

The plan is set. We are ready to execute. With that being said, we are going to start off slowly. Each week, we are going to purchase 1 share of Johnson & Johnson (JNJ) in both my portfolio and my wife’s portfolio.

This will result in adding over $300 per week to our portfolio, along with $8.08 to our forward dividend income. With 41 weeks remaining in 2021, we will end up amassing large positions in the Dividend King.

The dividend income added by 12/31/2021 will be insane. 82 shares combined will produce $331.28 in dividend income! That, of course, is without the company’s upcoming dividend raise in April and dividend reinvestment!

Summary

Overall, we couldn’t be happier to announce this strategy. I’m excited to consistently add to a position, regardless of the swings in the market. Johnson & Johnson is one of my favorite companies for a reason. We aren’t just buying a stock for the sake of buying a stock. We are buying a stake in a legendary dividend growth stock that will continue to pay, and grow, its dividend for decades. That is what it is all about! Let’s keep pushing and putting our hard earned capital to work. Time to buy income and reach financial freedom.

What do you think of our strategy? Do you purchase one stock or investment weekly? Is Johnson & Johnson one of your favorite dividend growth stocks as well?