One Raise at a Time | Becton, Dickinson & Company

Concept of how dividend growth investing works, health care, real estate
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 November 19th the Board of Directors at Becton, Dickinson & Company (BDX) approved an increase to the quarterly dividend payment.  The dividend was increase from $0.75 to $0.77 per share.  That's a 2.67% increase.  Becton, Dickinson is a Dividend Champion with 46 consecutive years of dividend increases.  Shares currently yield 1.27% based on the new annualized payout.

Since I own 8.198 shares of Becton, Dickinson in my FI Portfolio this raise increased my forward 12-month dividends by $0.66.  This is the 4th dividend increase I've received from them since initiating a position in April 2015.  Cumulatively, the organic dividend growth from BDX has totaled a whopping 28.3% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 6.7%.  

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

Becton, Dickinson's historic pace of dividend growth has been fantastic with 10%+ raises being the norm.  However, the last 2 increases have come in at just 2.7% which is a little disheartening since I purchased shares because I expected high dividend growth.

While that's disappointing I'm not concerned at all and fully expect faster dividend growth to return in a couple years.  Becton, Dickinson took on a good amount of debt when they acquired C.R. Bard (BCR) last year.  Management stated that their goal was to reduce their debt load/leveraged first and they've actually delivered on that thus far by prioritizing the balance sheet over rewarding shareholders.  Owners might not like that now, but it's a good sign of management that is focused on the long term health of the company and it's ability to continue to deliver results moving forward rather than just the next few quarters or years.  

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1962 can be found in the following chart.  

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

Wrap Up

This raise increased my forward dividends by $0.66 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.01% this raise is like I invested an extra $22 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.

So far in 2018 I've received 53 dividend increases from 46 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $463.89.  

My FI Portfolio's forward-12 month dividends increased to $6,718.08.  Including my FolioFirst portfolio's forward dividends of $90.84 brings my total taxable accounts dividends to $6,808.92.  My Roth IRA's forward 12-month dividends remain at $397.36.

Do you own shares of Becton, Dickinson & Company?  What other health care related companies do you own?

Please share your thoughts below.