What’s BD’s Recent Dividend Payment and Capital Allocation Strategy?
Quarterly cash dividend
On July 25, 2017, Becton Dickinson (BDX) announced the payment of quarterly dividends of $0.73 per share for 4Q17. The dividend will be paid on September 29, 2017, to shareholders of record on September 8, 2017.
For fiscal 2017, the indicated annual dividend is $2.92 per share. The dividend paid out in fiscal 2016 was $2.64 per share. Year-to-date, BD has paid $478 million as compared to around $421 million paid during the same period in the previous fiscal year.
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BD has a strong dividend payment record of increasing payments consecutively for the last 45 years. One of the company’s key goals for 2017 through 2019 is increasing dividends. Being a dividend aristocrat, a stock that increases dividends to its shareholders consistently for at least 25 years, the company is an attractive income stock for long-term investors. As of September 14, 2017, BD has a dividend yield of 1.5 and a dividend payout ratio of 57.6%.
Peers Abbott Laboratories (ABT), Medtronic (MDT), and Stryker (SYK) have dividend yields of approximately 2.1, 2.3, and 1.2, respectively. Investors can consider investing in the Vanguard Dividend Appreciation ETF (VIG) for exposure to BD. BD accounts for ~1.2% of the total holdings of VIG.
BD’s cash flow position and capital allocation strategy
BD has witnessed double-digit earnings growth over the recent quarters. It has maintained a strong balance sheet with increasing cash flows. As of June 30, 2017, BD had cash and cash equivalents of around $13.9 billion. Free cash flows stand at around $957 million.
In addition to the dividend payments of $478 million during the first three quarters of fiscal 2017, BD has also repurchased around $220 million of its common stock from its shareholders. Share repurchases were suspended for the rest of 2017 with the announcement of the acquisition of C.R. Bard (BCR).