Johnson and Johnson (JNJ) and Pfizer (PFE) are two of the classic core holdings that I own for portfolio stability. These are both large cap value pharmaceutical companies ($383B for JNJ’s market cap and $258B for PFE) and they are both components of the Dow Jones Industrial Average (DIA). JNJ has a 2.5% dividend yield and PFE has a 3.1% dividend yield. JNJ has a 7.1% annualized earnings growth rate for the past five years, as compared to PFE’s 10.4. PFE has P/E of 20.2 and forward P/E estimate of 14.7. JNJ is more expensive, with P/E of 26.1 and forward P/E of 17.5. JNJ has a 5-year dividend growth rate of 6.7% with a payout ratio of 62%, as compared to 7.8% 5-year dividend growth rate and 30% payout ratio for PFE. Based on these fundamental measures (P/E, yield, earnings growth, dividend growth, and payout ratio), PFE looks more attractive than JNJ.

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