Friday, December 28, 2012

Stock Analysis of Becton Dickinson


Becton, Dickinson and Company (BDX), a medical technology company, develops, manufactures, and sells medical devices, instrument systems, and reagents worldwide. The company is a member of the dividend champions list, and has been able to boost distributions for 42 years in a row.

The company’s last dividend increase was in November 2012 when the Board of Directors approved a 10% increase to 49.50 cents/share. The company’s peer group includes Medtronic (MDT), Baxter International (BAX) and St. Jude Medical (STJ).


Over the past decade this dividend growth stock has delivered an annualized total return of 11.70% to its shareholders.


The company has managed to deliver an 11% average increase in annual EPS since 2002. Analysts expect Intel to earn $5.63 per share in 2013 and $6.14 per share in 2014. In comparison, the company earned $5.30/share in 2012.

The return on equity has increased from 20% in 2003 to 26% by 2012. I generally want to see at least a stable return on equity over time.


The annual dividend payment has increased by 15.70% per year over the past decade, which is higher than the growth in EPS.

A 16% growth in distributions translates into the dividend payment doubling every four and a half years on average. If we look at historical data, going as far back as 1975, one would notice that the company has actually managed to double distributions every six years on average.

The dividend payout ratio has increased from 19% in 2003 to 34% in 2012. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.

Currently Becton Dickinson is attractively valued at 13.70 times earnings, yields 2.60% and has a sustainable distribution. I plan on initiating a position in the stock subject to availability of funds.

Full Disclosure: Long MDT

Relevant Articles:

My Entry Criteria for Dividend Stocks
Dividend Champions - The Best List for Dividend Investors
Medtronic (MDT) Dividend Stock Analysis 2012
Ten Top High Dividend Growth Stocks for Long Term Returns

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