Last update on 2024-06-27

Becton, Dickinson (BDX) - Dividend Analysis (Final Score: 7/8)

Detailed analysis of Becton, Dickinson's (BDX) dividend policy using an 8-criteria scoring system. BDX scores 7/8 for performance and stability in dividends.

Short Analysis - Dividend Score: 7

We're running Becton, Dickinson (BDX) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The dividend analysis of Becton, Dickinson (BDX) reveals a generally strong and stable dividend history over 20 years marked by an average yield notably higher than the industry average, steady growth in dividends, and consistent payout despite fluctuations. Although the annual growth rate of dividends shows some instability, the payout ratio is maintained below 65%, indicating prudent dividend management. The firm's coverage ratio and dividend stability, paying uninterrupted and increasing dividends for over 25 years, further emphasize financial health and reliability. BDX also ensures dividends are well-covered by earnings, though occasional spikes hint at some volatility. Importantly, stable dividends since inception and strong financial backing through stock repurchases over two decades highlight BDX’s shareholder-focused strategies.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Becton, Dickinson (BDX) appears to be a robust and dependable investment for dividend-focused investors. The consistent dividend payouts augmented by a strong coverage ratio, and strategic stock repurchases typically strengthen investor confidence. The occasional fluctuations in dividend growth rates are balanced out by historically stable dividends and sustainable payout ratios. Therefore, investors seeking long-term income and stability may find BDX a worthwhile consideration, although tracking periodic fluctuations and ensuring alignment with risk tolerance is recommended.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield represents the ratio of a company's annual dividend compared to its share price. A higher yield suggests a company is returning more income to its shareholders relative to the stock price.

Becton, Dickinson's current dividend yield of 1.5092% is notably higher than the industry average of 0.67%. Over the past 20 years, BDX has generally maintained a strong yield compared to its peers. The yield peaked at 2.36% in 2012, aligning with the stock price of $78.19. Despite stock price fluctuations, including a peak of $271.97 in 2019 and recent decline to $243.83, the yield remained competitively above 1.1%, exceeding industry norms significantly. An increasing dividend per share from $0.45 in 2003 to $3.68 in 2023 underlines sustained shareholder returns, signaling robust financial health in contrast to the industry's relatively stagnant improvement.

Average annual Growth Rate higher than 5% in the last 20 years?

The Dividend Growth Rate is an important measure of how a company's dividend payouts have increased over time. A rate higher than 5% over 20 years suggests financial stability and a commitment to returning value to shareholders.

Examining the provided Dividend Per Share data from 2003 to 2023, we can see a trend of inconsistency in the annual values. Although there are fluctuations, many years show a notable dividend distribution, indicating Becton, Dickinson's commitment to dividends. However, the average Dividend Ratio of approximately 11.49% does provide rough stability. Unfortunately, the erratic nature of some yearly values—such as a drastic jump to 40% in 2004 and a significant drop to 2.65% in 2019—makes it complicated to declare a steady growth above 5%. Hence, while the company has seen years with high dividend payouts, the fluctuations denote a volatile trend rather than consistent growth exceeding 5%, potentially making this aspect less reassuring for long-term dividend growth investors. Overall, the slightly erratic numbers hint at an unstable dividend growth, which can be concerning for those seeking steady income from dividends.

Average annual Payout Ratio lower than 65% in the last 20 years?

This checks if the average payout ratio over the past 20 years is under 65%, ensuring dividend sustainability.

The average payout ratio for Becton, Dickinson (BDX) over the last 20 years is approximately 54.84%. This is below the critical threshold of 65%, which generally indicates a healthy balance between earnings retention and dividend payments. Therefore, BDX has maintained a sustainable dividend payout on average. However, there have been some significant spikes, specifically in 2015 and 2016 when the payout ratios were 73.45% and 256.96%, respectively. The 2016 ratio is exceptionally high, possibly due to a one-time event, affecting long-term sustainability assessment. Still, the overall payout ratio trend demonstrates prudent fiscal management favoring sustained dividends.

Dividends Well Covered by Earnings?

The coverage ratio of dividends to earnings denotes the proportion of profits paid out as dividends. A ratio below 100% indicates dividends are well-covered by current earnings, ensuring sustainability and financial stability.

Becton, Dickinson's (BDX) dividend coverage ratio has shown commendable signs of sustainability with an average ratio below 100% over the years. For instance, their ratio was as low as 0.216 in 2003, indicating that they paid out only 21.65% of their earnings as dividends. Analyzing recent trends, in 2022 the ratio stands at 0.5605 (56.05%), and despite a fluctuation in 2018 (2.57 or 257%) due to possible extraordinary earnings or one-time costs, the company appears committed to ensuring its dividends are well-covered by earnings. This trend indicates a robust capacity for dividend sustainability, promoting confidence among investors, unless there are extraordinary events that may necessitate higher payouts temporarily. Maintaining a coverage ratio generally below 100% is a positive indicator of financial health for dividend investors.

Dividends Well Covered by Cash Flow?

Explain the criterion for Becton, Dickinson (BDX) and why it is important to consider

Dividends being well covered by cash flow is crucial for Becton, Dickinson (BDX) as it indicates financial stability and a sustainable dividend policy. It signifies the company's ability to generate enough cash to meet its dividend payments without compromising operational efficiency or investment in growth opportunities. This forms a key aspect of investment decisions for long-term shareholders.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over the past 20 years, where the dividend per share did not drop by more than 20%, indicate financial health and offer predictability for income-seeking investors.

Examining the provided dividend per share values from 2003 to 2023 for Becton, Dickinson (BDX), it's clear that there has not been a drop of 20% or more at any point within the past two decades. The values show a consistent upward trend from $0.45 in 2003 to $3.68 in 2023. This stability is good; it signifies reliable company growth and resilience, making BDX an attractive option for investors prioritizing consistent income. The commitment to stable and steadily increasing dividends suggests robust financial management and strong cash flow.

Dividends Paid for Over 25 Years?

Dividends paid for over 25 years is a criterion reflecting the company's long-term commitment to returning value to shareholders, signifying stability and consistent financial health.

Becton, Dickinson (BDX) has been paying dividends consistently for the past 25 years, as evident from its annual dividend per share data ranging from $0.302 in 1998 to $3.68 in 2023. The continuous increase in dividends indicates BDX's strong and stable financial performance. The annual increments in dividends also highlight the company’s commitment to returning value to its shareholders. For instance, the dividend per share increased from $0.302 in 1998 by approximately 1,118% to $3.68 in 2023. This trend is decidedly positive, suggesting good financial management, a steady revenue stream, and shareholder-friendly policies sustained over a substantial period.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

Examining the history of Becton, Dickinson's stock repurchases over the last 20 years is pivotal because consistent buybacks signal management's commitment to returning capital to shareholders. When companies use excess cash to repurchase stock, it usually reduces the number of shares outstanding, potentially boosting earnings per share (EPS) and providing support for the share price. Furthermore, repurchase programs often signify confidence in the company's future performance. Now let's analyze BDX's repurchase pattern over the last 20 years.