Rooting around for income-producing investments these days,
one quickly bypasses 10-year Treasuries and is on to dividend
stocks, and few places are better to start at than the list of
S&P 500 Dividend Aristocrats
.
10 Year Treasury Rate
data by
YCharts
There, you'll find an exclusive club of companies that raised
their payouts annually for at least 25 years. They tend to be
slow-growing, solidly-managed and devoted to sending checks to
shareholders, including such household names as McDonald's (
MCD
), Coca-Cola (
KO
) and Johnson & Johnson (
JNJ
). Two of the more prosaic businesses among the Aristocrats are
Leggett & Platt (
LEG
), which makes furniture components, a dreary business that it
nevertheless dominates and squeezes nice margins out of, and
Becton Dickinson (
BDX
), a maker of medical supplies including needles and such.
Right now, a quick look at the two stocks might steer you
toward Leggett & Platt. After all, its
dividend yield
of 4.4% is tempting, and its most recent performance includes
positive revenue growth. Becton Dickinson, meanwhile, offers a
dividend yield
of a mere 2.4% and most recently had a down quarter on
revenue.
But let's take a look at the long term (history is no
guarantee of future performance, but it's worth noting). Over the
past ten years, each has continually boosted their dividend but
look at the difference:
BDX Dividend
data by
YCharts
Becton Dickinson is also far more conservative with its cash,
paying out a much smaller percentage of earnings in dividends.
Thus, it would seem to have more potential for dividend hikes
going forward.
BDX Payout Ratio TTM
data by
YCharts
Yield junkies have also bid up Leggett & Platt's stock, so
its
PE ratio
, at about 21, is very pricey compared to Becton Dickinson's
PE ratio
, at about 14. And over the long haul, Becton Dickinson has been
more of a growth company.
BDX Revenue TTM
data by
YCharts
Today's dividend yield may seem skimpy, but if Becton
Dickinson continues its historical pattern, long-term holders
will be richly rewarded, as suggested by a
stock chart
.
BDX
data by
YCharts
Jeff Bailey is the editor of YCharts, which includes the
just-released
YCharts Pro Platinum
for professional investors.