Monday, April 13, 2015

Can Becton, Dickinson & Company Cure Your Portfolio?

To no one's surprise the health care industry has a long-term bullish thesis with the aging baby-boomer population advancing in age. Unfortunately, as we age we also tend to use more health care services. Becton, Dickinson and Company (NYSE:BDX) provides just about everything a hospital needs to treat its patients: needles, syringes, reagents to identify diseases and so much more. Becton, Dickinson and Company is a dividend champion with 43 consecutive years of dividend growth. BDX closed trading on Friday, April 10th at $143.21, with a current yield of 1.68%.

The following tables/graphs are from my personal stock analysis spreadsheet. Data for the stock analysis was acquired through Becton, Dickinson and Company's investor relations page, Morningstar, and Yahoo Finance.

Historic Growth Rates:

Historically, owners of Becton, Dickinson and Company have done very well. According to longrundata.com, BDX has rewarded investors with a total return of 289% or 11.22% annualized over the last 10 years. Looking at the historic growth rates for per share dividends, earnings, revenue, and free cash flow paints a solid historical basis.

You can read the full analysis of Becton, Dickinson & Company at Seeking Alpha.

4 comments:

  1. Great analysis, JC! No doubt BDX is a great dividend grower, but it seems too expensive to be of interest right now. I prefer a 2.5% yield, which requires BDX to trade at $96. For a 10% dividend growth rate, which doesn't seem sustainable in the long run given earnings growth, I'm willing to come down to a 2.2% yield. But that still means BDX needs to trade at $109.

    I really like how you do fair value estimates using various models -- I need to learn how to do that!

    Cheers
    FerdiS

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    1. Ferdi,

      BDX is an absolutely excellent company. I'd love to own them at a 2.5% yield but that will probably take a really large correction in the stock market to see those prices. I'll have this company in my portfolio at some point and if it dips into the high $130's I'll probably start a position.

      You can check out my stock valuation method series if you want to see how I do it.

      http://www.passive-income-pursuit.com/search/label/stock%20valuation%20method

      Thanks for stopping by!

      Delete
  2. I do like BDX, its a play on a strong secular trend, stable business. Has a strong market share in sharps. I'm still with consistent accumulation on this one. Do believe it could be bought a little cheaper as you suggest.

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    1. Integrator,

      Absolutely love BDX and wish I had bought shares when I thought it was a bit expensive back in the $80's a couple years ago. Wonderful company and I love their future with the aging global population. Just wish the yield was a bit higher but I'll probably add this company in the near future. Actually I guess I should check out their direct stock purchase program for a possible slow but steady accumulation rather than trying to pick my entry points.

      Thanks for stopping by!

      Delete