Becton, Dickinson and Company (NYSE:BDX) has steady demand for its medical devices, together with a long history of paying dividends. The company’s product range includes medical essentials, connected care, biopharma systems, and devices for interventional procedures, which means it is exposed to spending on essential healthcare. Its decision to separate the Biosciences and Diagnostic Solutions business in February 2026 has also altered its earnings profile. Despite these changes, its established business and dividend track record make it one of the best blue-chip dividend stocks to consider. Check the list here.
The most recent figures offer a degree of cautious optimism. Revenue from ongoing operations rose 5.4% year on year to $4.98 billion in the third quarter of fiscal 2026, and adjusted diluted earnings per share rose 4.9% to $3.23. The company has raised the midpoint of its full-year adjusted earnings per share guidance to $12.67, which represents a growth of about 6.5% compared with the $11.90 recorded in fiscal 2025.
However, revenue growth is still in the low single digits when currency effects are eliminated, so margin expansion and effective execution are essential to the investment case.
Forward P/E: A discount with conditions
Becton, Dickinson and Company has a forward P/E of about 13.72x and a trailing P/E of 31.58x. The forward P/E suggests an earnings yield of 7.29%, which is about 2.1 percentage points higher than the roughly 5.19% 10-year US Treasury yield that was reported on October 13, 2026, and the spread serves to compensate investors for the equity risk, although it does not guarantee an excess return. The higher trailing multiple is due to the fact that the reported earnings involve a number of significant adjustments relating to purchase accounting, restructuring, litigation, and other matters.
Compared to the $3.81 reported continuing-operations EPS for fiscal 2025, BD’s guidance for adjusted earnings per share in fiscal 2026 ranges from $12.62 to $12.72. This difference is important since the lower forward multiple is based on the idea that adjusted earnings become a reliable indicator of sustainable profitability, rather than merely assuming that all the costs excluded are temporary.
Historical data on Yahoo Finance indicates that the forward P/E ratio was in the range of 11.20x to 12.97x from June 2025 through March 2026, before rising to 13.72x in the most recent period. This shows a recovery in valuation, though it does not appear to be an obvious bargain when compared with BDX’s own recent range. Nevertheless, the ratio is still lower than Medtronic’s 14.93x and Stryker’s 16.47x. Comparisons between the companies cannot be made directly due to differences in growth, business mix, and the dates of the data. Read Medtronic’s detailed valuation analysis here.
Dividend safety: Cash flow matters more than headline yield
BD offers an annual dividend of $4.20 per share and a yield of about 2.38%. Based on the fiscal 2026 adjusted EPS guidance, the implied payout ratio is around 33%, which means there is scope for reinvestment, for reducing debt, and for future increases in the dividend. The company is also a Dividend King, having achieved 54 years of consecutive dividend growth. Still, a strong dividend track record does not automatically make BDX the best choice, as seven companies rank higher on our list of the best blue-chip dividend stocks. Check here to see which stocks made the cut.
In the first nine months of fiscal 2026, operating cash flow from ongoing operations rose by 33.3% to $2.10 billion and free cash flow increased by 44.6% to $1.73 billion. The figures offer solid support for the dividend, even though debt service and other obligations have to be taken into account. Long-term shareholders might find that both dividend growth and the possibility of a rise in the share price make a greater contribution to their total returns than the initial yield alone. Yet since the 2.38% yield is below that of the 10-year Treasury yield, investors have to depend on earnings growth and capital appreciation in order to justify the extra risk.
What might weaken the investment case?
The main risk is that adjusted earnings will not result in continued GAAP profitability. Money could still be taken up by product-related litigation, remediation expenses, restructuring, and integration costs. The business that remains after the separation also has to show that its more targeted portfolio is able to achieve profitable growth without depending too heavily on cost cuts.
Conclusion
BDX’s dividend is reasonably well covered and has a forward valuation that is lower than that of some of its peers in the medical-device sector. However, the apparent discount hinges on adjusted earnings proving to be sustainable, whereas its forward multiple has already moved above a large part of its past historical range. For investors who are interested in dividends, the combination of cash generation and a moderate payout offers a solid basis; the stronger argument for purchasing the stock is based on ongoing earnings growth and better reported profitability, not the dividend by itself.
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This article is originally published at Insider Monkey.
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