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Johnson & Johnson, Community Healthcare Trust: Income Stocks to Watch

Ryan McQueeney
Ryan McQueeney puts two income stocks --- Johnson & Johnson (JNJ) and Community Healthcare Trust (CHCT)---in the spotlight this week. JNJ delivered impressive earnings a few days back, while CHCT is an interesting REIT to watch in current conditions.

One week removed from the market’s worst week of trading in months, stocks struggled to extend a rebound this week amid hawkish commentary from the Fed. That said, Q3 earnings season has kicked into full gear, and Wall Street has had plenty of solid reports to digest over the past few days.

One of these strong reports was from pharmaceutical and consumer goods giant Johnson & Johnson JNJ. The company put up quarterly earnings of $2.05 per share, topping the Zacks Consensus Estimate by two cents and extending its positive surprise streak. Meanwhile, revenue came in at $20.35 billion, improving more than 3.5% from the year-ago period.

Johnson & Johnson has not missed earnings estimates in almost two decades according to our data, so a beat on the bottom line would likely not have been enough for investors to take the stock higher. However, this did manage to generate impressive post-earnings momentum because the company also raised its guidance. A beat-and-raise quarter is what Wall Street wants to see in today’s environment.

Ryan holds JNJ in the Income Investor portfolio service, so on today’s episode, he recapped its earnings report and explained why post-earnings traders might have a different perspective than buy-and-hold investors.

Also on today’s show, Ryan examines the newest addition to the Income Investor portfolio: Community Healthcare Trust CHCT.

CHCT is a REIT focused on community healthcare facilities. It has 91 properties across 27 states, with assets worth about $417 million and totaling just over 2.1 million square feet. The dividend yield on CHCT right now is 5.5%.

Ryan explains that CHCT presents several key factors that investors should look for in REITs right now: a high percentage of mortgage debt classified as fixed, growing funds from operations, and a high occupancy rate.

Moreover, Ryan also suggests that now might be the time to add REIT exposure. Sure, these might get dumped as investors sell perceived “rate sensitive” stocks as interest rates rise. But once that initial fright wears off, REITs can be valuable to own as they perform even better in periods of economic strength.

Make sure to check out today’s video for more of Ryan’s commentary on JNJ and CHCT!

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