Becton, Dickinson & Co (BD) is a medical technology company specializing in developing, manufacturing, and selling medical supplies, devices, laboratory equipment, and diagnostic products. Founded in 1897 by Maxwell Becton and Fairleigh S. Dickinson. BD has become one of the world’s leading medical device companies. With over 75,000 employees in more than 50 countries worldwide, BD is dedicated to improving healthcare safety globally through its innovative products and services.
BD offers a broad range of products and services to healthcare professionals, life science researchers, clinical laboratories, the pharmaceutical industry, and the general public. The company’s portfolio ranges from single-use disposable products to complex systems for diagnostics and cell analysis applications. The company is best known for developing products such as single-use syringes, safety needles, infusion pumps, wound closure devices, and drug delivery systems that are used in hospitals across the globe. In addition to this wide range of offerings, the company provides services such as training programs for end users on product selection, installation, and maintenance. It also provides software solutions for its customers, which help them streamline its processes from patient care delivery to data management efficiently. From advanced medical products and services to quality patient care, they strive to make a difference in the lives of millions of people every day.
Business Model
BD operates through three main divisions: BD Medical, BD Life Sciences, and BD Interventional.
BD Medical is the most important for BD, accounting for over 47% of total sales. The BD Medical segment offers extensive products to improve patient care. This includes everything from syringes and injection needles to blood collection systems, laboratory automation equipment for diagnostics testing, automated infusion pumps for delivering medications intravenously, and advanced data analytics software for tracking patient outcomes. By providing these tools, BD enables clinical teams to be more precise in their treatments while also driving operational efficiencies that can help lower costs overall. BD Medical primarily served hospitals and clinics; physicians’ office practices; consumers and retail pharmacies; governmental and non-profit public health agencies; pharmaceutical companies; and healthcare workers.
BD Life Sciences is BD’s second-largest business segment, accounting for over 30 percent of total sales. BD Life Sciences offers a wide range of products for specimen management ranging from sample collection consumables to transportation systems. They are uniquely designed to provide flexibility when collecting samples from different types of patients with varying needs. In addition, BD Life Sciences also provides instrumentation and reagents that enhance the accuracy and efficiency of laboratory processes. BD Life Sciences has been a significant part of BD’s success over the past few years. Its revenue growth has outpaced overall company revenue growth due to increased demand for its specimen management services.
BD Interventional represents the company’s smallest segment, accounting for approximately 23% of total sales. BD Interventional provides products and services that support clinicians in vascular, urology, oncology, and surgical specialty care. The division offers various solutions to address its customers’ clinical needs, ranging from patient-specific procedures to cutting-edge technologies. From balloon dilatation catheters for treating peripheral artery disease to precision stents for managing tumors, BD Interventional is dedicated to advancing patient care through safe and effective medical devices.
Growth Prospects
For more than a century, the company has been at the forefront of technological advancements in its industry, assisting in the improvement of patient outcomes around the world. Becton, Dickinson & Co appears poised to continue its strong growth in the future, thanks to an ever-expanding product portfolio. In 2017 alone, they acquired four companies, allowing them to expand their product offerings even further. Furthermore, the overall healthcare sector remains robust. It is expected that the ageing population will continue to grow, along with the demand for more products and services from companies such as Becton Dickinson & Co. with their expansive portfolio of products, they are well placed to take advantage of new opportunities in this space. As one of the leading medical technology providers of safety, security, and care solutions, Becton Dickinson & Co remains an attractive option for investors looking to capitalize on the company’s potential future growth.
Dividend Profile
Becton Dickinson & Co has been a reliable dividend payer for many years, and its current dividend yield of 1.44% and payout ratio of 60.8. %. However, during in 2018 and 2020, Becton Dickinson & Co’s payout ratio skyrocketed to above 100% due to the tough economic climate and one-off acquisition charges. The company was able to maintain its dividend payments even during this difficult time thanks to its healthy balance sheet and strong cash flow position. By taking prompt action and cutting back on non-essential costs, it was able to ensure that shareholders continued receiving their dividends without interruption. Going forward, investors can expect Becton Dickinson & Co’s payout ratio to return closer to the industry average at around 60% as conditions improve over time.
In total, BD has increased its dividend for 51 consecutive years and its dividend per share has been increasing at a CAGR of 5.8% for the last 10 years.
Business Risk
Despite its success in the healthcare industry, Becton Dickinson & Co face many risks associated with conducting business on an international level.
Geopolitical & Currency risk: The most prominent risk faced by BD is the potential disruption of its supply chain due to disruptions in the global economy. BD generates nearly 50% of its revenue outside the United States, making it susceptible to foreign exchange rate risks and global economic conditions. For instance, the pandemic has caused significant global disruption in production and trade, which directly affected BD’s operations.
Regulatory risk: As a healthcare provider, BD must comply with stringent regulations imposed on its industry. These ever-changing compliance standards require regular updating of processes and structures, increasing operational costs for the company
Closing Thoughts
Becton, Dickinson & Co is an attractive investment for those looking to diversify their portfolio and receive a steady dividend yield. The company has been in business for over 125 years and is currently one of the world’s largest global medical technology companies. BDX offers investors a steady stream of dividends and potential capital gains from stock price appreciation. The company’s commitment to innovation, operational excellence, and customer focus has contributed to its success over the years, making it attractive to income-seeking investors who want exposure to healthcare stocks. In total, BD has increased its dividend payments for 51 consecutive years and offers investors a value-packed dividend yield of 1.44%.