Dividend Increase | Becton, Dickinson & Company $BDX #Dividend

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks BDX for another 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 10th the Board of Directors at Becton, Dickinson & Company (BDX) approved an increase in the quarterly dividend payment.  The dividend was increased from $0.87 to $0.91 which is an okay 4.6% increase.  BDX is a Dividend King with 51 consecutive years of dividend growth.  Shares currently yield 1.60% based on the new annualized payout.

The new dividend will be payable December 30th to shareholders of record as of December 9th.

Since I own 18.454 shares of Becton, Dickinson & Company in my FI Portfolio, this raise increased my forward 12-month dividends by $2.95.  This is the 8th raise that I've received from Becton, Dickinson since initiating a position in 2015 with total organic dividend growth coming to 52%.

I also own  26.542 shares in my Rollover IRA and this raise increased my forward 12-month dividends for that portfolio by $4.25.

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

BDX's dividend growth streak is might impressive at 51 years old.  Most companies won't even last that long, yet BDX has been thriving.  Their streak began all the way back in 1972 and the streak of paying the same or higher annual dividends dates back to 1962.

During their streak, BDX's year over year dividend growth has ranged from 2.2% to 40.0% with an average of 11.0% and a median of 10.5%.

There's been 46 rolling 5-year periods over that time with annualized dividend growth spanning from 3.7% to 21.4% with an average of 11.0% and a median of 10.2%.

Additionally, there's been 42 rolling 10-year periods with BDX's annualized dividend growth coming in between 6.7% to 16.7% with an average of 11.3% and a median of 10.6%.

Dividend growth has been pretty subpar since 2018 although as the chart below shows that's not out of the ordinary for BDX to have a slow period every decade or so.  

The 1-, 3-, 5-, and 10-year rolling dividend growth rates for Becton, Dickinson and Company since 1962 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 3-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 & Company's 3-year average forward dividend yield is 1.36% which corresponds to a share price of $268 based on the new annualized payout.  

I consider the fair value range based on dividend yield theory to be the 3-year moving average yield +/- 10%.  That gives a fair value range of $243 - $297 and suggests that shares are currently trading  below the low end of fair value.

Wrap Up

This raise increased my forward dividends by $2.95 with zero effort on my part.  That's right, absolutely nothing to contribute to their operations.  Based on my FI Portfolio's current yield of 2.57% this raise is like I invested an extra $115 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.

This is the 53rd dividend increase I've received from the companies in my FI Portfolio increasing my forward 12-month dividends by $580.54 combined.

My FI Portfolio's forward-12 month dividends are $11,074.06  Including my FolioFirst portfolio's forward dividends of $233.69 brings my total taxable accounts dividends to $11,307.75.  My Roth IRA's forward 12-month dividends are $1,060.22.  My Rollover IRA's forward dividends are $4,663.02.  Across all accounts I can expect to receive $17,030.99 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?  Do you think they will return to high single digit to low double digit annual dividend growth?  Or will the be stuck in the low to mid single digit range?

Please share your thoughts below.