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Becton, Dickinson and Co. Raises Dividend by More than 5%

Shauvik Haldar Dec 03, 2020

Becton, Dickinson and Co. (BDX), the New Jersey-based company is a global medical technology solution provider that operates through 3 business segments: BD Medical, BD Life Sciences and BD International.

BD Medical helps improve healthcare delivery via their medical technology solutions and is used by hospitals, clinics, consumers and pharmacies. The medical segment provides medical delivery solutions, medication management solutions, diabetes care and pharmaceutical systems. This is the company’s biggest business segment, bringing in nearly 50% of its revenues in FY 2020

BD Life Sciences offers solutions for the safe collection and transportation of diagnostic specimens, instruments and reagent systems to detect a wide range of diseases. This segment is the second-largest revenue contributor, bringing in nearly 27% of BDX’s revenues in FY 2020.

BD International provides various vascular, oncology and surgical specialty products. This segment brought just over 20% of the company’s revenues in FY 2020.

The company has a significant presence outside of the U.S, with international markets bringing in nearly 40% of the company’s revenues in FY 2020.

Dividend Increase Decision Bodes Well With Strong Business Outlook

During Q4 2020, BDX faced headwinds at its biggest division, with BD Medical revenues dropping nearly 5% on a year-over-year basis. The only positive was a significant demand for its pharmaceutical systems, driven by strong growth in pre-filled and safety syringes. BD Life Sciences saved the day for BDX, with the segment reporting a nearly 31% jump in sales on a year-over-year basis. This was primarily due to more than a 90% increase in diagnostic system revenue as demand for BDX’s COVID-19-related testing solutions soared. BD International also reported slightly lower revenue during Q4 2020 on a year-over-year basis.

Lower revenues, pricing presures and COVID-19 related expenses eventually impacted the company as earnings per share declined during both Q4 and FY 2020 compared to the same period during the previous year.

However, the company’s cash-flow generation capability remains strong. BDX reported cash flow from operations at $3.5 billion for FY 2020, which is nearly 6% higher than that reported in FY 2019. The company also remains prudent at debt management, having repaid nearly $1.7 billion during FY 2020.

Optimistic outlook was one of the primary reasons BDX decided to increase its dividend for the 49th consecutive year. This time the company raised its quarterly dividend from 79 cents per share to 83 cents per share payable to shareholders of record as of December 10, 2020.

The company remains strong on the innovation front, having launched nearly 30 new products across all of its three business segments in FY 2020. BDX also remains quite active in the merger and acquisition space, having executed six deals in FY 2020.

In order to streamline its innovation pipeline, the company had set up the new BD Growth and Innovation Fund earlier this year to fund projects for a maximum period of two years. Several projects are in the pipeline, including those related to COVID-19 diagnostic solutions.

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