The Becton Dickinson dividend yield is near a 10-year low. Investors have bid up the share price and investing now might lock in lower long-term returns.
Business Overview and Highlights
Becton Dickinson has a $67 billion market cap and it’s based out of Franklin Lakes, New Jersey. The company employs 76,000 people and pulled in $16 billion in sales last year. That works out to about $210,000 per worker.
Becton Dickinson is a powerhouse in the medical technology space. The company’s clients include the general public, health care institutions, researchers, laboratories, and the pharmaceutical industry. The company is well diversified and produces steady cashflows to support its dividends.
Becton Dickinson Dividend History 10-Years
Becton Dickinson has paid investors $1.32 per share a decade ago. Since, the Becton Dickinson dividend has climbed to $3. That’s a 127% improvement and you can see the annual changes below…
The compound annual growth is 8.6% over 10 years… but over the last year, the dividend climbed 2.7%. The slowdown in Becton Dickinson’s dividend growth isn’t a great sign. Let’s take a look at the dividend yield history…
BDX Current Dividend Yield vs. 10-Year Average
Becton Dickinson’s long history of paying dividends makes it one of the best dividend stocks around. This also makes the dividend yield a great indicator of value. A higher yield is generally better for buyers.
The Becton Dickinson dividend yield comes in at 1.24% and that’s below the 10-year average of 2.03%. The chart below shows the dividend yield over the last 10 years…
The lower dividend yield shows that investors have bid up the company’s market value. They might be expecting higher growth and payouts. But more often than not, the dividend yield is mean reverting with share price changes.
Improved Becton Dickinson Dividend Safety Check
Many investors look at the payout ratio to determine dividend safety. They look at the dividend per share divided by the net income per share. So a payout ratio of 60% would mean that for every $1 Becton Dickinson earns, it pays investors $0.60.
The payout ratio is a good indicator of dividend safety… but accountants manipulate net income. They adjust for goodwill and other non-cash items. A better metric is free cash flow.
Here’s Becton Dickinson payout ratio based on free cash flow over the last 10 years…
The ratio is fairly steady over the last 10 years and the trend is up. The last reported year shows a payout ratio of 39.3%. This gives plenty of wiggle room for Becton Dickinson’s board of directors to raise the dividend.
The Becton Dickinson dividend is safe for now but the dividend yield is near historical lows so you might want to shop for better dividend stocks in the current market.
If you’re interested in seeing more dividend research, please comment below. You can also check out our free dividend reinvestment calculator.
Good investing,
Robert
