Monday, November 27, 2017

One Raise at a Time | Becton Dickinson Turns 46

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Getting a pay raise while sitting on the couch?  Sign me up!  Thanks BDX for the dividend increase!
Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?  Dividend growth investing is far from a get rich quick investment strategy, rather you need to remain focused on the long term goal to be successful.
On Monday of last week the Board of Directors at Becton, Dickinson & Company (BDX) approved an increase to their quarterly dividend payment. For the last year the company had paid owners $0.73 per share, but now owners can expect payments of $0.75 per share.  That's a bit of disappointing raise at just 2.7%.  However, Becton, Dickinson & Company is a Dividend Champion with 46 years of dividend growth so I'll still be sticking around.  Shares currently yield 1.33% based on the new annualized payout.

Since I own 8.092 shares of Becton, Dickinson in my FI Portfolio this raise increased my forward 12-month dividends by $0.65.  This is the 3rd dividend increase I've received from BDX since initiating a position in early 2015.  Through organic dividend growth alone BDX has increased my annual dividend payments over 25% cumulatively.  According to US Inflation Calculator the cumulative rate of inflation over that same time is just 4.1%.  That's dividend growth investing in a nutshell.  



A full screen version of this chart can be found here.

I like to examine the dividend growth rates that a company has doled out over time in order to see whether dividend growth is holding steady, increasing or decreasing.  Looking at this gives you an idea of the possible future direction of dividend growth.

Becton, Dickinson & Company has had a great run of consistent double digit annual increases.  Even last years decline only brought the year over year increase to 8.49% which is still respectable.  This latest increase is concerning; however, if you look back at their history they've had periods of low dividend growth before returning back to solid double digit increases.  Bolstering my faith in BD righting the ship is that analysts are forecasting 11%+ annual earnings growth over the next 5 years which should lead to solid future dividend growth as well.
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Becton, Dickinson & Company (BDX) Annual Dividend and Rolling Dividend Growth Rates
*2018's dividend assumes 4 payments at the new $0.75 quarterly rate.  

A full screen interactive version can be found here.

Wrap Up

My forward dividends increased by $0.65 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.81% this raise is like I invested an extra $23 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash my way.  

That's how you can eventually reach the crossover point where your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

Thus far in 2017 I've received 44 dividend increases from 37 companies held in my FI Portfolio increasing my forward 12-month dividends by a combined $263.56.

My FI Portfolio's forward-12 month dividends increased to $5,794.99.  Including my FolioFirst portfolio's forward dividends of $75.86 brings my total taxable accounts dividends to $5,870.85.  My Roth IRA's forward 12-month dividends are at $317.73.

Do you own shares of Becton, Dickinson & Company?  Are you concerned about the sharp decline in dividend growth or waiting it out for brighter days ahead?

Please share your thoughts below.

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3 comments:

  1. BDX has been in my portfolio since I went the DGI route. It's one of those "forever" holds in my opinion. Might be bought up one day though and go the route of BCR. The medical "staples" are a great sector for any dividend growth investor. Happy to be a fellow shareholder with you.

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  2. My best guess with BDX and this low increase is they're in process of buying up BCR costing a lot of money including an increase in share count ahead of closure and further share count increase at closure to fund it. Maybe it makes sense to deliver a smaller increase to allow BCR closure and deleveraging.
    I'm long on BDX as well, this being one of my first DGI investments and hopeful future increases will be better.

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