Is Johnson & Johnson (JNJ) the Best Safe Stock to Buy According to Hedge Funds?

We recently published a list of 11 Best Safe Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against other best safe stocks to buy according to hedge funds.

In times when you never know what you’ll wake up to the next morning, playing safe seems to be the wisest choice. Amid consistent market shifts and global uncertainties, it’s difficult not to lean towards reliability. With rising global recession risks and political uncertainties, protecting the capital has become a priority for many. As Charlie Munger, Vice Chairman of Berkshire Hathaway, once said,

“The idea of investing in a company just because it’s safe is not necessarily a good idea. But it’s a much better idea than investing in something that is clearly risky.”

If we think about a “safe” stock, a low-risk stock usually comes to our mind. While it’s true, there is even more to it. A safe stock generally stems from a well-established company possessing a strong balance sheet, a track record of decent performance, solid market positioning, and a dividend history. So, when looking for a safe stock, it’s important to look for not one, not two, but all of these metrics. In its entirety, these are usually “blue chip stocks” that are market leaders in the industries they operate.

Hedge funds, recognized for their strategies and in-depth market understanding, have long advocated for such stocks for their reliability and resilience. These managers carefully study the market trends and then weigh in on businesses that are deemed to deliver both value and predictability.

As reported by Reuters, hedge funds are fleeing the stocks of companies that are providing what customers want, and what they don’t need. As the signs of a global recession are becoming more and more evident, hedge funds are dumping their positions in consumer discretionary. “Hedge funds dumping consumer discretionary stocks strongly suggests they’re bracing for economic trouble, likely a recession,” mentioned Bruno Schneller, the Managing Director at Erlen Capital Management.

Similarly, a Goldman Sachs report, comparing the gains by Hedge Fund VIP basket and the broader market, indicates that the top 50 stocks preferred by hedge funds have collectively returned 10% in 2025 relative to the market’s 3% gain.

In a “Low-Risk Stocks Outperform within All Observable Markets of the World” paper by Nardin Baker and Robert Haugen, the differences in performance by low-volatility stocks and high-volatility stocks in developed and emerging equity markets worldwide were compared. The results revealed that stocks with low realized volatility exhibit higher future returns at lower risk than stocks with relatively higher realized volatility, thus contradicting the traditional inference that attributes higher returns to higher risks. Given this, we will take a look at some of the best safe stocks to consider.

Our Methodology

In compiling a list of the 11 best safe stocks to buy according to hedge funds, we used Insider Monkey’s database of over 1,000 hedge funds, as of Q4 2024, and picked mega-cap stocks with positive five-year returns and next-year revenue growth. All of these factors are considered to ensure that the stocks selected yield low volatility and high safety. In addition, we also considered stocks that pay dividends to shareholders to ensure safety and reliability. The stocks are ranked in ascending order of the hedge funds having stakes in them.

At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Johnson & Johnson (NYSE:JNJ)

Number of Hedge funds holding: 98

Forward Dividend: $5.20

Johnson & Johnson (NYSE:JNJ) is a global healthcare company focusing on innovative medicines and medical technologies. Headquartered in New Jersey, the company serves a wide clientele, including retailers, wholesalers, healthcare professionals, and hospitals. While the pharmaceuticals cover therapy areas including immune disorders, cancer, neurological disorders, and metabolic diseases, the medical devices are developed for use in cardiovascular, orthopedic, neurovascular care, general surgery, and vision care fields. Incepted in 1886, the company believes health is everything.

With visionary changes in progress, Johnson & Johnson (NYSE:JNJ) is taking the lead. Just recently, the management unveiled plans to invest over $55 billion in the United States over the upcoming four years in the areas of manufacturing, R&D, and technology. This 25% increase in investment, in contrast to the last four years, showcases that the company is not just an ordinary business.

Traditionally recognized as a consumer health company, Johnson & Johnson (NYSE:JNJ) has successfully transitioned to a healthcare company by incorporating segments like pharmaceuticals and MedTech. The company’s focus on developing next-gen medicines and devices is what we are excited about the most. As part of the investment strategy, the company is set to build four planned new manufacturing facilities.

Additionally, the acquisition of Intra-Cellular Therapies, which expands the giant’s industry-dominating portfolio in central nervous system disorders, has the potential to contribute more than $5 billion in peak-year sales. Johnson & Johnson (NYSE:JNJ) has also posted an increase in dividends for the 63rd consecutive year in its latest earnings report. This commitment to returning shareholder value is something that not many realize.

This 2025, the management expects the company to report higher growth levels, with major contributions from TREMFYA and other immunology assets. Having said that, the sales growth rate is projected to stand between 3.3% to 4.3%, with $92 billion as a midpoint. The urge to shift the treatment paradigm makes JNJ a compelling case and one of the best safe stocks according to hedge funds.

Overall, JNJ ranks 11th on our list of best safe stocks to buy according to hedge funds. While we acknowledge the potential of JNJ as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than JNJ but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.