When searching for reliable high-dividend stocks, it’s essential to look beyond just the highest dividend yield. Often, companies with elevated yields have seen their stock prices decline sharply, and that could indicate underlying issues. It’s crucial to consider not only the dividend size but also how quickly it’s increasing.
Take, for instance, two companies, A and B. Company A offers a 3% yield while Company B provides a 2% yield. At first glance, investing in Company A might seem like the better choice. However, if Company B’s dividends are consistently rising, it’s possible that in a few years, its yield could surpass that of Company A. So, it’s wise to analyze more than just the dividend yield.
Consider Becton Dickinson
There are some strong dividend stocks worth exploring, particularly Becton Dickinson (BDX), a manufacturer of medical products. This company primarily earns from essential items like syringes, blood collection tubes, and catheters. Such products are always in demand, ensuring substantial and stable revenue streams. Remarkably, around 90% of its earnings come from these consumables.
Currently, Becton Dickinson offers a yield of 2.7%, which is relatively attractive, especially compared to the S&P 500’s average yield of about 1.1%. More impressively, its dividends have grown at an average rate of 10.5% per year over the last five years. Additionally, the company has a long history, having increased its dividend for 54 consecutive years.
The stock’s price is also enticing, with a forward price-to-earnings ratio around 12, notably lower than its five-year average of 16. Its price-to-sales ratio sits at 2.2, again below the five-year average of 3.2.
Moreover, shareholders have something extra to cheer about: Becton Dickinson is actively buying back and canceling a significant amount of its shares, which enhances the value of remaining shares. Thus, combining the dividend yield with the impact of buybacks, the total recent yield for shareholders is an impressive 8.3%.
