Investors seeking some protection from market volatility might look toward companies with stable growth and solid future prospects, such as Becton Dickinson & Co (NYSE:BDX), which delivered a total return on its shareholders’ investments of nearly 50% over the past three years.
Furthermore, after some volatility and two separate double-digit-percentage pullbacks over the last year, the share price has fully recovered those losses and appears to be back to its long-term growth trendline. This long-term uptrend saw the share price double over the past five years.
While declining 27% in the aftermath of the 2008 financial crisis, this stock drop was significantly less drastic than what many other equities experienced in the same timeframe. However, while the drop was not as large, the recovery was also slower than other equities. Unlike many other stocks that recovered fully from the negative effects of the 2008 financial crisis within 12 to 18 months, Becton Dickinson’s share price traded relatively flat and managed to recover only half of its losses over the subsequent three years.
However, Becton Dickinson accelerated its share price growth at the beginning of 2013 and recovered the second half of its 2008 losses in just three months. Since resuming the accelerated growth at the beginning of 2013, the share price has nearly tripled.
The share price roller-coaster over the past 12 months drove the moving averages to cross each other’s path several times. Additionally, the share price also fluctuated wildly from significantly above both moving averages to more than 12% below both moving averages at its 52-week low in December 2018.
However, in the process of rising more than 13% by mid-May 2019, the share price pushed the 50-day moving average above the 200-day moving average in a bullish manner most recently on July 18, 2019. Additionally, after severe market volatility and selloff in the first half of August, the share price closed back above both moving averages.
The company started paying dividend distributions in 1926 and has boosted its annual payout amount for the last 47 consecutive years. Just over the past two decades, Becton Dickinson enhanced its total annual dividend amount more than nine-fold. This level of advancement corresponds to an average growth rate of 11.6% per year since 1999. While growth rates generally decline as the total payout amounts rise, Becton Dickinson managed to maintain an average growth rate of 5.7% over the past five years.
The current $0.77 quarterly payout amount corresponds to an annualized distribution of $3.08, which is equivalent to a 1.22% forward dividend yield. Because the share price more than doubled over the past five years and the annual dividend payouts rose at a significantly slower pace, the current yield is more than 11% below the company’s own 1.38% five-year average yield.
While trailing its own yield average, Becton Dickinson outperformed the average industry yields by wide margins. The Health Care sector has traditionally low dividend yields. Therefore, even at 1.22%, the Becton Dickinson current yield is nearly 120% higher than the Health Care sector’s 0.56% overall average yield.
Furthermore, Becton Dickinson currently has the second highest yield in the Medical Instruments & Supplies industry segment, which is more than triple the segment’s current 0.39% yield average. Moreover, even compared to the 0.77% average yield of the segments only dividend-paying companies, the Becton Dickinson yield is 60% higher.
After tripling between the end of 2012 and the beginning of the current 12-month period, the share price reached its all-time high of $264.38 on October 1, 2018. However, the Becton Dickinson stack was unable to withstand the downward pressure from the overall market selloff in the last quarter 2018. Under that pressure, the share price dropped more than 20% between the beginning of October and its 52-week low of $251.38 on December 24, 2018.
The share price reversed trend and regained nearly 80% of its losses before suffering another pullback in April 2019. However, the share price resumed its uptrend and closed by August 19, 2019, at $251.48. While still nearly 5% short of the all-time high level from October 2018, the August 19 closing price just edged out the $251.35 closing price from one year ago for a marginal gain. However, the current closing price is nearly 20% higher for the current year, as well as 115% higher than it was five years ago.
While the dividend income constituted 96% of the 1.28% total return over the last 12 months, asset appreciation was the main driver behind long-term returns. Over the last three-years, Becton Dickinson rewarded its shareholders with a total return of nearly 50%. Furthermore, the company’s shareholders more than doubled their money over the last five years with a total return of nearly 125%.
Becton Dickinson & Co (NYSE:BDX)
Headquartered in Franklin Lakes, New Jersey, and founded in 1897, Becton Dickinson and Company develops, manufactures and sells medical supplies, devices, laboratory equipment and diagnostic products worldwide. The company’s BD Medical segment offers peripheral intravenous (IV) closed-system drug transfer devices, hypodermic syringes and needles, anesthesia needles and trays, enteral syringes, as well as pen needles and other products for diabetes care. Furthermore, this segment also offers hazardous drug detection, infusion pumps and dedicated disposables, as well as medication workflow, automated medication dispensing and medication inventory optimization systems.
Its BD Life Sciences segment provides specimen and blood collection products and systems, automated blood and tuberculosis culturing, molecular testing and liquid-based cytology systems. Additional products from this business segment include rapid diagnostic assays, microbiology laboratory automation products and plated media products, as well as fluorescence-activated cell sorters and analyzers. The company’s BD Interventional segment offers mostly single-use thoracic and abdominal drainage, surgical and laparoscopic instrumentation and peripheral intervention products, as well as urology and critical care products. Additionally, this segment also offers hernia and soft tissue repair, biological and bioresorbable grafts, as well as surgical and surgical infection prevention products.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.