Becton Dickinson: “Top of the List”

07/28/2014 7:00 am EST


With the S&P 500 health sector up more than 25% over the past year, I think it's worth looking at some of the more established and high quality companies in the industry, suggests Bill Hall in Money and Markets.

That way, investors can participate in the healthcare boom without taking on a lot of the risk associated with the high flyers.

One of my favorite companies in the healthcare sector is Becton Dickinson (BDX), whose stock has gained about 9% year-to-date.

Becton Dickinson is the world's largest manufacturer and distributor of medical surgical products, such as needles and syringes. The company also manufactures a wide array of diagnostic instruments and reagents. International revenue accounts for 58% of the company's business.

Becton Dickinson's needle and surgical tool empire has provided investors with excellent returns on capital for years. The essential and disposable nature of its medical products, which account for nearly half of its total sales, gives the firm robust cash flows for reinvestment into its business.

The focus over the past few years has been growing its business in the emerging markets, where the marketplace remains largely untapped and the prevalence of infectious diseases makes Becton Dickinson single-use needles and syringes valuable to both nurses and patients.

The company's executives are among the best in the industry. What's more, the company remains committed to its history of consistent dividend growth. With a current yield of 1.78% and a dividend that's likely to grow in the future, shareholders can expect a solid cash-on-cash return while they wait for the stock to appreciate.

In today's risky investment environment, my aim is to focus on high quality and Becton Dickinson is at the top of my list.

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