In a highly uncertain environment, one thing is clear.

The demand for health care will not merely continue…

It will dramatically increase in the years to come.

Health care has always been a “defensive” industry, as people get sick no matter what the economy is doing. But worldwide demographic trends have also made health care one of the fastest growing industries as well.

This growth shows no signs of abating.

Demand for health care will dramatically increase because of one simple fact. Older people require more health care than younger people. And older people today represent a greater percentage of the population than ever before.

People are living longer. The fastest-growing segment of the world’s population, in fact, is aged 65 and older. These people, particularly the U.S. Baby Boomers born from 1946 to 1964, are an enormous population bubble, a group of people beginning to hit retirement age. In fact, U.S. citizens aged 65 and older are expected to reach 20% of the population by 2030.

#-ad_banner-#In addition, as developing nations become wealthier, their large populations will demand more and better health care.

How can investors’ best position themselves to benefit from the phenomenon?

With the trend toward health care so broad and far reaching, there’s no need to gamble. Stick with the best in class. That’s Johnson & Johnson (NYSE: JNJ).

JNJ is the world’s largest and most diverse health-care company. This New Jersey-based giant has been in business for more than 120 years, since Grover Cleveland’s first term. The company engages in the research, development, manufacture and sale of health-care products through more than 250 entities in 60 countries.

Johnson & Johnson is the best way to take advantage of the health-care trend. The company not only sells pharmaceuticals but everything from medical devices as complicated as heart stents to the simple, ubiquitous Band-Aid. JNJ is the epitome of a blue-chip stock, a large, well-respected company with worldwide sales of $63.7 billion in 2008.

Here are just a few things to like about the company.

• Management has achieved 26 consecutive years of earnings increases. (The dividend has seen 47 consecutive years of increase.)
   
• Its products are the best. Seventy percent of sales are from products with a No. 1 or No. 2 market share.
   
• J&J has an unassailable financial position. It’s rated “AAA” by Moody’s and Standard and Poor’s (Not even Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A) has an AAA rating.)
   
• The company is a strong innovator: A quarter of the products it sold in 2009 were introduced in the past five years.

Most large pharmaceutical companies specialize. Johnson & Johnson, uniquely, has a significant leadership role in three health-care segments: pharmaceuticals (36% of revenue), medical devices and diagnostics (38%), and consumer products (26%). JNJ’s pharmaceutical unit has several leading drugs, including rheumatoid arthritis treatment Remicade. Consumer products include household staples such as Listerine and Tylenol.

JNJ pays quarterly dividends. The per-share payout has been at $0.49 since the second dividend of 2009. The stock has a solid yield of 3.1%. J&J has increased the dividend each year for nearly a half-century, and by an average of +11.1% during the past five years.

JNJ is reasonably valued: Shares trade for less than 13 times 2010 projected earnings, well below its five-year average price of more than 16 times earnings. It has beaten the market: While the S&P 500 is lower than it was 10 years ago, JNJ has averaged +5.7% per year in total return during the same period.

JNJ sports one of the best pipelines of drugs and products in the industry and has an ever-expanding international presence. Looking forward, the slow-growth economy combined with increased demand for health care products should play well into JNJ’s hand.

The company is reasonably valued and should make an excellent core holding and provide solid and predictable returns in the uncertain years ahead.