Set to get a new chief executive officer at the end of the month, can Becton Dickinson & Co (NYSE:BDX) continue its streak of beating analysts’ earnings estimates and extend its current share price uptrend?
While trading mainly sideways in 2018 and most of 2019, the share price received a lift from a strong share price surge since late-2019 to reward its shareholders with double-digit asset appreciation in the last 60 days.
After delivering a 3.4% earnings surprise in the first-quarter 2019, Becton Dickinson delivered slightly lower levels of surprise in the remaining three quarters and beat the cumulative earnings estimates for the full year by 1.2%. The upcoming transition at the top of the organization should have no impact on the upcoming financial results that are scheduled for release before markets open on Thursday, February 6, 2020.
However, while taking over as the chief executive officer from Vincent A. Forlenza who held the position for nearly a decade, Tom Polen – the incoming CEO – has extensive experience after more than two decades with the company, including serving as president since April 2017 and as chief operating officer since October 2018. Additionally, Mr. Forlenza – the outgoing CEO – will maintain its function as the executive chairman of Becton Dickinson’s board of directors. With continuity in its top management position, the company should be able to extend its current trend and continue its streak of positive performance reports.
Becton Dickinson has been rewarding its shareholders with steady dividend distributions since 1926. Furthermore, after hiking its annual dividend payout for 47 consecutive years, the company delivered its 48th consecutive annual boost at the end of 2019. As a Dividend Aristocrat for more than two decades, the most recent dividend boost brought Becton Dickinson to only two more annual dividend hikes away from becoming a member of the even more exclusive group of just 13 Dividend Kings.
Just over the past two decades, Becton Dickinson enhanced its total annual dividend amount almost nine-fold. This level of advancement is equivalent to an average growth rate of 11.3% per year since 1999. While growth rates generally decline as the total payout amounts rise, Becton Dickinson still managed to maintain an average growth rate of almost 7% over the past five years.
The current $0.79 quarterly payout reflects a 2.6% boost for the December distribution over the $0.77 payout amount from the previous quarter. The new quarterly payout amount corresponds to an annualized distribution of $3.16, which currently yields 1.14% forward dividend yield. Despite steady increases, the dividend growth rate could not the rapid advancement of the Becton Dickinson share price which more than doubled over the past five years. Therefore, the rising share price pushed the yield 18% below the company’s own 1.4% five-year yield average.
While seemingly low compared to the overall market norm of approximately 2% and trailing its own yield average, Becton Dickinson’s current yield outperformed sector and segment averages. With traditionally low yields among Health Care companies, Becton Dickinson’s current yield is more than 140% higher than the sector’s 0.47% yield average. Furthermore, Becton Dickinson yield outperformed the 0.43% average yield of the Medical Instruments & Supplies industry segment by 165%. Moreover, as the second highest yield in that segment, the company’s current yield was almost 60% higher than the 0.72% average yield of the segment’s only dividend-paying companies.
While tripling between the end of 2012 and the beginning of the current 12-month period, the share price traded mostly flat during the last year of that three year period. After entering the trailing 12-month period, the share price continued its sideways movement before dropping nearly 7% to its 52-week low of $222.84 in mid-May 2019. Through increased volatility the share price fluctuated over the subsequent six months on its way to recovering those losses by.
However, after reporting strong financial results for its fiscal fourth-quarter year end in early-November 2019, Becton Dickinson saw its share price took off and surged nearly 16% before hitting its new all-time high of $277.30 on January 15, 2020. By the end of trading on January 20, 2020, the share price pulled back just 0.1% and closed at $277.08. This closing price was 15.8% higher than it was one year earlier, more than 24% above the 52-week low form May 2019 and nearly twice the level from five years ago.
After relying on dividend income for most of its gains in 2018, asset appreciation delivered more than 90% of the 17.2% total returns over the past 12 months. Over the last three years, Becton Dickinson rewarded its shareholders with a total return of 65%. Furthermore, the company’s shareholders more than doubled their money over the last five years with a total return of nearly 108%.
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.