With 3% Yield, Is Johnson & Johnson Buyable?

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True many pay dividends, but don't paint all pharma companies with the same brush.

"Big pharma is complicated," said Cramer. Some of the gains in the sector have to do with yield.

"As long as the Fed keeps rates low, investors looking for yield don't have that many options," Cramer said. "Largely they're forced into dividend-paying stocks – and pharma has a slew of companies that pay dividends.

But Jim Cramer doesn't want you to think that dividends alone are reason enough to jump into pharma willy-nilly. Quite the contrary – Cramer said it should merely be used as a jumping off point.

From there the Mad Money host says it's imperative that you identify fundamental catalysts that could drive shares higher.

And in the case of Johnson and Johnson, Cramer sees a number of tailwinds. "The company has been doing a bunch of smart things," he said. Some follow:

1. The board has made an accretive acquisition. "Back in OctoberJNJ closed on its deal to take over Synthes," Cramer said. "The move expands the company's orthopedic offerings and also gives them more exposure to the higher-margin trauma business," Cramer said.

2. JNJ has a rapidly expanding oncology business. "Last quarter sales of their anti-cancer products were up 48.5% thanks to the strength in Velcade, their treatment for multiple myeloma, as well as Zytiga, their prostate cancer drug that has the potential to be a serious blockbuster," Cramer said.

3. A treatment made by Johnson & Johnson for diabetes is showing great promise. "The FDA just last week approved JNJ's Invokana for type 2 diabetes, which could be a billion dollar drug by 2016."

4. JNJ has a healthy pipeline. "The company has three big products in phase 3 development, a Hepatitis C drug, a leukemia drug, and a rheumatoid arthritis drug, which we could get more data on at the company's business review on May 23rd," Cramer said

5. The company's new CEO could be a rock star. "Former CEO Bill Weldon left the firm a year ago and was replaced by Alex Gorsky, who is widely viewed as perhaps the brightest young start in pharma firmament," Cramer said.

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However, of all the reasons to own the stock, perhaps none is more compelling than a potential of a spin off.

"Johnson & Johnson is a big, messy company that gets 38% of its sales from pharma, 41% from medical technology, as well as 21% from its consumer division, and I think it's a classic case of a business that's just begging to be broken up in order to unlock value for shareholders," Cramer explained.

"JNJ's pharma business has genuine growth here, and I think it would actually appeal to the vast cohort of growth money managers out there, getting a higher valuation than the combined company does right now. Meanwhile, the medical device and consumer parts of the company are total value plays—they appeal to a completely different cohort of investors."

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All told, Cramer likes the possibilities, despite a recent downgrade by JPMorgan.

Take all the catalysts outlined above and combine them with JNJ's bountiful 3% yield and 'top-notch balance sheet,' and Cramer thinks you've got a winner. "I think you want to own the stock," Cramer said.

Disclosure: On Monday April 8th Jim Cramer owned shares of Johnson & Johnson on behalf of his charitable trust.

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