Dividend Increase | Becton, Dickinson & Company (BDX)

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks BDX for the dividend increase!
There's an old Chinese proverb that says "the best time to plant a tree was 20 years ago, the next best time is now".  The reason for this is that it takes time for a tree to grow and prosper and for you to start reaping its benefits.  Dividend growth investing is much the same way.  It takes consistent saving and investing as well as time and patience to let the power of dividend growth take hold.

That's why one of my favorite things is when one of the companies I own decides to pay out more in dividends.  You mean I get a pay raise just for owning a small piece of a company?  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.  

On November 25th the Board of Directors at Becton, Dickinson & Company (BDX) approved an increase to the quarterly dividend payment.  The dividend was increased from $0.77 up to $0.79 per share.  That's just a 2.6% increase, but a raise nonetheless.  BDX is a Dividend Champion with 48 consecutive years of dividend increases.  Shares currently yield 1.21% based on the new annualized payout.

The newly increased dividend will be payable on December 31st to shareholders of record as of December 10th.

Since I own 12.304 shares of Becton, Dickinson & Company in my FI Portfolio, this raise increased my forward 12-month dividends by $0.98.  I also own 7.015 shares of BDX in my Rollover IRA and this increase boosted my dividends by $0.56.  This is the 5th dividend increase I've received since initiating a position back in 2015 and the organic dividend growth over that time comes to 32%.

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

Of the 48 1-year periods during Becton, Dickinson's streak annual dividend growth has ranged from 2.2% to 40.0%.  The average 1-year growth rate has been 11.4% with a median coming in at 10.6%.

Of the 38 10-year periods annualized dividend growth has ranged from 8.3% to 16.7%.  The average annualized 10-year growth has has been 11.6% with a median of 10.8%.

This increase was definitely one of the smaller raises that Becton, Dickinson & Company has handed out during it's streak.  While that's a bit disappointing, I believe that management is playing the long game here as they've done in the past.  They issued a significant amount of debt to complete their last acquisition and are following through with de-leveraging.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1963 can be found in the following chart.  

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

For dividend yield theory I consider the fair value range to be the forward dividend yield +/- 10% compared to the 5 year moving average, the under/over value area to be to between 10%-20% deviation from the average and significant over/under value are greater than a 20% deviation from the average.

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

Becton, Dickinson's 5-year average forward dividend yield is 1.48% which corresponds with a share price of $213.19 based on the newly raised dividend.  

I consider the fair value range based on dividend yield theory to be the 5-year moving average yield +/- 10%.  That gives a fair value range of $194 - $237 which suggests shares are currently trading towards the upper end of fair value.

Analysts expect Becton, Dickinson to have earnings of $12.57 for FY 2020 ending September 30, 2020, and $18.62 for FY 2021.  The current price of $260.69 has shares valued at 20.7x and 18.6x forecasts, respectively.  Using the EV/EBITDA shares look decently valued at 17.2x.

The return from an investment is comprised of 3 parts: growth in earnings + dividend yield + changes to valuation.  Before accounting for valuation changes, Becton, Dickinson could potentially produce 10.8% annualized returns; although the question right now is whether valuation changes are going to be a head or tail wind on future returns.  

Wrap Up

This raise increased my forward dividends by $0.98 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my FI Portfolio's current yield of 2.89% this raise is like I invested an extra $34 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.

My FI Portfolio's forward-12 month dividends are $7,771.10.  Including my FolioFirst portfolio's forward dividends of $101.12 brings my total taxable accounts dividends to $7,872.22.  My Roth IRA's forward 12-month dividends are $629.93.  My Rollover IRA's forward dividends increased to $2,327.16.  Across all accounts I can expect to receive $10,829.31 in dividends over the next year.

I've also started compiling dividend data on many of the companies that I own or would like to own.  Becton, Dickinson & Company's can be found here which includes the dividend history (as far back as I can find without spending hours hunting it down), rolling dividend growth rates and dividend yield theory.  To see other companies that I've already gathered the data on you can check out the Dividend Companies page.  Check it out and let me know what you think.

Do you own shares of Becton, Dickinson & Company?  How has dividend growth for your holdings fared in 2019?  Better or worse than you expected?

Please share your thoughts below.


  1. Never owned the company but it seems like a solid play. How has the capital appreciation been in the years you have holded?

    This year everything is firing on all cylinders, no cuts, with 1 or 2 known exceptions all raises and capital has been appreciated nicely.

    1. Mr. Robot,

      BDX is solid, but the starting yield was what kept me from investing too much in the company. But in the end it's a high quality company and while dividend growth has been lackluster the last 2 years and possibly will be next year as well, management is following through on the deleveraging plan post their acquisition. I fully believe that once the balance sheet is cleaned up we can expect ~10% annual dividend growth more often than not.

      I have no complaints about the capital appreciation since I first purchased shares. They're up 83% in price since 4/2015.

    2. I'm with you here, JC! Yes, I'm not happy with that marginal divvy raise of 2 cents. If I own a low yielding stock such as BDX, I want to see strong dividend growth, which is not the case here. But I'm patient. EPS prospects are good. I like the medical devices business. BDX will return to stronger divvy growth, once the deleveraging is finished. In addition, the good thing about reducing debt is that their credit rating might improve. I would love to see it. Currently it's rated BBB by S&P.


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