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C.R. Bard (NYSE:BCR) is a medical device manufacturer with products in four markets: vascular (angioplasty catheters and stents, grafts and blood oxygenation), urology (catheters, urine collection systems and incontinence aids), oncology (gastroenterological, bladder, prostate tests) and surgical specialties (hernia repair, orthopedic and laparoscopic products). The company produces a 20%+ return on equity and has grown earnings at approximately 17% for the past 10 years. Dividend growth has been slower but should pick up in the next 2 to 3 years.

As you can tell by its product mix, Bard is well situated to benefit from an aging population and should be able to maintain above average profit and dividend growth because:

  1. the company has a complete line of cost effective, high margin products that are primarily single use,
  2. a top notch R&D effort producing a strong pipeline of new high margin proprietary products,
  3. strategic acquisitions to complement and enhance its current product line,
  4. an expanding marketing effort,
  5. an aggressive cost control program.

Negatives:

  1. an intensively competitive industry,
  2. a lackluster pricing environment,
  3. it is in a highly regulated industry.

BCR’s stock has been a stellar performer in our Portfolio, having traded well past our Sell Half Price, and is a great example of why we only sell half of a well performing position as long as the company continues to meet all our financial hurdles. While the current yield on the stock is only .8%, it yields 5% on our cost -- again another great example of why we want to own the stocks of companies that consistently raise their dividends. The company is rated A++ by Value Line and has a 32% debt-to-equity ratio.

Statistical Summary

Stock Yield

Dividend Growth Rate

Payout Ratio

# Increases Since 2001

BCR

.8%

9%

10%

10

IND**

1.3

8*

23

NA

Debt/Equity

ROE

EPS Down Since 2001

Net Margin

Value Line Rating

BCR

32%

29%

0

21%

A++

IND

36

29

NA

18

NA

*over 50% of the companies in this industry don’t pay a dividend

**IND is the average of all companies the Medical Supplies Industry in the Value Line Survey

Chart Notes: BCR made good progress off its March 2009 low, quickly surpassing the down trend off its September 2008 high (red line). It took much longer to challenge the November 2008 trading high (green line); in fact, the stock has struggled with this level and currently trades below it. Long term, the stock in is an up trend (straight blue lines); intermediate term it is also in an up trend (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolio owns a one half position by virtue of it having hit its Sell Half Range in early 2008. However , the stock is back on the Dividend Growth Buy List. The lower boundary of its Sell Half Range is $135.

(Click chart to expand)

Soruce: Yahoo Finance

Disclosure: I am long BCR.

Source: We Are Putting C.R. Bard On Our Buy List