To this day, the firm I worked at is one of the largest assets under management (AUM) shops in the world. And while there I had a mentor, who I will call "Joe" to protect his anonymity
Joe was something of a stereotype. He was freaky with math, loved chess, never married, and wore a really bad toupee.
He was also the happiest person in the building.
You see, Joe was worth more than pretty much everyone else who worked on our floor - all upper-management included. He never feared the stock market and would whistle while others cried over their 401k performances.
Joe's secret to success was that he owned a position in Johnson & Johnson. He had worked for the company in the past, and he'd built up a nice-sized block of stock while he was there. Better still, he added to this single position with every dividend.
In a business that preaches diversification, Joe did the exact opposite in his personal life - and it worked for him. I would never suggest an investor fixate on a single investment the way Joe did, but in his context it was amazingly rewarding.
Joe called Johnson & Johnson a once-in-a-lifetime investment - and in a way it still is.
Johnson & Johnson has split at least three times in the last twenty years, and has grown its dividend during that time. It is currently yielding about 3.5%, which is head-and-shoulders above what U.S. Treasuries and bank accounts are paying.
And while the stock has not gone up much in the last decade, the dividends have been pouring in, buying new shares, and in the process compounding the real rate of return on invested capital.
So it's time to buy Johnson & Johnson (NYSE: JNJ) (**).
We may never be like my friend Joe, with a zero average cost basis on a growing pile of shares, but we can still enjoy some of the slow and steadily growing dividend from this AAA-rated company.