The 5 Safest Dividend Stocks Part 5: Becton Dickinson & Company

04/03/2020 5:00 am EST


Ben Reynolds

CEO, Sure Dividend

In this 5-part series, we selected the five safest dividend stocks around — each a Dividend Aristocrat with 25+ years of consecutive dividend increases, notes income expert Ben Reynolds, editor of Sure Dividend.

Read Part 1: Walmart here…

Read Part 2: Clorox here…

Read Part 3: Hormel here…

Read Part 4: Colgate-Palmolive here…

The final stock in our series is medical device manufacturer Becton Dickinson & Company (BDX). BDX was founded all the way back in 1897 — today, it has almost 50,000 employees across 190 countries, and the company generates annual revenue of approximately $18 billion.

BDX recently reported solid financial results for its fiscal 2020 first quarter. Revenue increased 1.6% to $4.2 billion. Excluding currency impacts, revenue increased 2.6% for the quarter. Multiple operating segments showed strength in the most recent quarter.

For example, Pharmaceutical Systems revenue grew 7% on higher demand for pre-fillable syringes. Life Sciences revenue grew 6.4%, while Diagnostic Systems revenue increased 5.3% due to a strong start to flu season. Lastly, revenue for the Interventional segment grew 4.4% on strong sales of Surgery, Urology and Critical Care products.

Growth in these areas helped offset weak performance in the company’s Medication Management Solutions business, which posted a revenue decline of 8%. However, this was due to a lack of installations for the Alaris System pumps, which have been recalled due to software issues. As this is likely short-term in nature, investors can expect a return to growth in the coming years.

BDX outperformed the market in the Great Recession as well as the recent Coronavirus Crisis, in large part because of its defensive business model. As a healthcare company, it supplies products that are necessary for patients, regardless of the broader economic climate. Even in recessions, people need medical devices, which provides BDX with steady profits.

We expect continued long-term growth for BDX after the coronavirus has passed, from organic growth opportunities as well as acquisitions.

In 2015, the company acquired CareFusion, a leading supplier of diagnostic products and medical devices. In 2017, the company closed on the massive $24 billion purchase of C.R. Bard, which expanded BDX’s portfolio in the areas of Vascular, Oncology, Urology and Surgical Specialties devices.

In addition, BDX is working on treatments for COVID-19. On March 10th, BDX announced along with Certest Biotec that their molecular test for detection of COVID-19 is available to clinical laboratories in several countries.

Separately, on March 30th BDX and privately-held BioMedomics announced the release of a new point-of-care test that can confirm current or past exposure to COVID-19 in as little as 15 minutes. This test will be released to healthcare providers around the United States.

As a result, investors should expect BDX to continue generating strong profits—which will in turn fuel its continued dividend payments to shareholders.

BDX is a Dividend Aristocrat, having raised its dividend for 48 consecutive years. The stock has a current yield of 1.4%, which is below the S&P 500 average yield, but BDX makes up for this with consistent dividend growth. And investors can be confident that the dividend is secure, even in a severe recession.  

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