Becton Dickinson is a global medical technology company engaged in the development, manufacture, and sale of a broad range of medical supplies, devices, and diagnostic products.
The company serves customers including healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry, and individual consumers in more than 190 countries worldwide. Becton Dickinson’s products are manufactured and sold in the USA, Europe, EMA, Greater Asia, Latin America, and Canada. The company operates through a strong network of independent distribution channels and sales representatives. It also has extensive R&D facilities in North America, China, France, India, Ireland, and Singapore.
Becton Dickinson operates through three worldwide business segments, BD Medical which is the largest and accounted for 54% of 2018 revenues (produces a wide range of medical technologies and devices used by hospitals and clinics; physicians, etc.), BD Life Sciences (27% – provides products for the collection and transport of diagnostics specimens, instruments and reagent systems) and BD Interventional (19% – provides vascular, urology, oncology and surgical specialty products). By solutions, medication delivery is the largest constituting 23% of (2018) revenues, followed by medication management (16%), pharmaceutical, preanalytical, diagnostic systems, and diabetes care, biosciences, urology, etc.Investment Data
- Opportunity Score: 46
- Ticker: NYSE:BDX
- Sector: Healthcare
- Industry: Medical Instruments & Equipment
- Market Cap: 68.26B
- P/E: 88.72
- Dividend Yield: 1.22
- Dividend Payout Ratio: 105.84
- FFO Payout Ratio: Dividend Snapshot Members Only
- FCF Payout Ratio: Dividend Snapshot Members Only
- Chowder Score: Dividend Snapshot Members Only
- Piotroski-F Score: Dividend Snapshot Members Only
- 3, 5, 10-year Revenue Growth: Dividend Snapshot Members Only
- 3, 5, 10-year Dividend Growth: Dividend Snapshot Members Only
Revenue Growth & Market Exposure
With over 120-years of experience under its belt, Becton Dickinson has developed a strong reputation for its quality products and trust of its customers. The company’s presence across multi-disciplinary areas of medicine and diversity across geographies and customers grants it enough immunity from fluctuations in any particular segment.
The company has a sound history of successful integrations. Its last acquisition of TVA Medical strengthened its portfolio of invasive vascular access solutions for kidney disorders. The acquisition of C.R. Bard, Inc. in 2017 led to the addition of transformative capabilities in the treatment of multiple chronic diseases. The combination has already started showing good results. Becton Dickinson is also divesting its interest in businesses including its interest in the Vyaire Medical JV and its Advanced Bioprocessing business to focus more on its core strengths.
About 80% of Becton Dickinson’s revenue is derived from developed markets and the balance is from emerging markets. While cash flows from developed markets make it highly safe and predictable, the company is also focusing on gaining additional market share in developing markets as well. Becton Dickinson is in a good position to gain from the high demand growth trend for affordable healthcare and medical products in these markets.
Becton Dickinson witnessed an excellent 2018 marked by growing revenues, expanding margins and double-digit EPS growth. The company launched a total of 25 major products during the year. Becton Dickinson’s continuous efforts towards providing leading medical technologies and innovative solutions for customers and patients should drive long-term growth. Future growth is supported by a strong pipeline of new products expected to be launched, across all the segments, in the current year. Becton Dickinson has guided FY19 revenues to grow by 5%-6% supported by strong growth in its Interventional segment.
Becton Dickinson is an S&P500 Dividend Aristocrat, having raised its dividend for 46 years in a row. Its dividend growth has been impressive at more than 10% CAGR annually, over the last decade. The company has a very high payout ratio of 89% and a low annual yield of 1.2%. It last raised its dividend payout by 2.7%.
Becton Dickinson’s dominant position in the medical supplies industry augurs well for its long-term dividend growth. The company operates in a recession proof industry which further safeguards its revenues. It’s revenue is highly diversified by geography and is well balanced between the US and other international markets. It witnessed a double-digit revenue (in FY18) growth in emerging markets led by China. It is in a good position to gain from growing consumerism and increasing spends on healthcare in the emerging markets.
Becton Dickinson’s string of acquisitions such as CareFusion and C.R. Bard has led to an expansion in its total addressable market and integrated product offerings. It should also benefit from the integration with Bard which is progressing in line with expectations. Becton Dickinson is expecting its earnings to grow by 6%-7% in FY19.
With that said, the dividend growth for this aristocrat has slowed down. From 10.00% dividend growth over the past 10 years to 7.72% over the past 3 years. If the trend persists, investors might have to review their investment thesis.
Becton Dickinson competes with companies of all sizes in the global medical technology field. It faces intense competition in the areas of molecular diagnostics, safety-engineered devices and in the life sciences. Low-cost manufacturers are further creating excessive pricing pressures. The advent of technology companies into healthcare industry is also intensifying competition. Abbott Laboratories and Roche are Becton Dickinson’s major rivals. BD’s huge investment in R&D activities provides an edge over the competition. The company also owns significant intellectual property and trademarks in the U.S. and other countries, which forms a wide moat around its business. It will be difficult for newcomers to replicate the breadth and depth of Becton Dickinson’s portfolio, distribution reach, and economies of scale.
|Ticker||Company||Sector||Industry||Score||Quote||Market Cap||PE||FPE||EPS||Yield||Payout Ratio||Payments||Dividend||Chowder||Achiever||Aristocrat||King||Graph|
|JNJ||Johnson & Johnson||Healthcare||Drug Manufacturers||76||131.33||346.60||21.78||15.25||6.11||2.89||62.19||4||3.80||9.16||YES||YES||YES||1|
|ABT||Abbott Laboratories||Healthcare||Medical Devices||57||79.63||140.74||48.85||24.55||1.64||1.61||77.93||4||1.28||-1.20||YES||YES||NO||1|
|ABBV||AbbVie Inc||Healthcare||Drug Manufacturers||51||73.63||108.86||27.12||8.26||2.72||5.81||157.63||4||4.28||5.79||NO||YES||NO||1|
|BDX||Becton Dickinson & Co||Healthcare||Medical Instruments & Equipment||46||252.86||68.26||88.72||19.50||2.91||1.22||105.84||4||3.08||8.94||YES||YES||NO||1|
|CAH||Cardinal Health Inc||Healthcare||Medical Distribution||81||46.92||13.72||10.40||9.34||4.53||4.10||42.48||4||1.92||13.72||YES||YES||NO||1|
With more than a century’s old existence, Becton Dickinson & Co has become a leading name in providing advanced healthcare solutions, diagnostics and the delivery of care. Millions of patients and health care providers depend upon the company’s cost effective and efficient solutions for healthier lives. As a critical supplier to the healthcare industry, the company continues its legacy of innovation. Its new product innovation should continue to fuel growth in the future. Becton Dickinson is a good long-term dividend growth candidate with a five-year dividend growth CAGR of 10%. Investors should expect solid dividend growth going forward as well.
DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.