Merck & Co Inc's Dividend Analysis
Assessing the Upcoming Dividend and Historical Performance of Merck & Co Inc
Merck & Co Inc (NYSE:MRK) recently announced a dividend of $0.77 per share, payable on 2024-04-05, with the ex-dividend date set for 2024-03-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Merck & Co Inc's dividend performance and assess its sustainability.
What Does Merck & Co Inc Do?
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Merck & Co Inc operates in the pharmaceutical industry, focusing on the development of medicines across various therapeutic areas including cardiometabolic disease, cancer, and infectious diseases. Its immuno-oncology platform is a key driver of sales growth, particularly in the oncology sector. The company also boasts a robust vaccine business and a division dedicated to animal health products. Geographically, the United States accounts for just under half of Merck & Co Inc's total sales.
A Glimpse at Merck & Co Inc's Dividend History
Merck & Co Inc has upheld a steadfast record of dividend payments dating back to 1985, with dividends being distributed on a quarterly basis. The company has not only consistently paid dividends but has also increased them annually, earning its status as a dividend aristocrata title reserved for businesses that have consistently hiked their dividends for at least 25 years. Below is a chart illustrating the annual Dividends Per Share to track historical trends.
Breaking Down Merck & Co Inc's Dividend Yield and Growth
As of the latest data, Merck & Co Inc boasts a trailing dividend yield of 2.40% and a forward dividend yield of 2.51%, indicating an anticipated increase in dividend disbursements over the coming year. The company's dividend growth is also notable, with an annual dividend growth rate of 6.10% over the past three years, which climbs to 8.00% over a five-year span, and stands at 6.00% over the past decade. Consequently, the 5-year yield on cost for Merck & Co Inc stock is approximately 3.53%.
The Sustainability Question: Payout Ratio and Profitability
When evaluating dividend sustainability, the dividend payout ratio is a critical metric, indicating the proportion of earnings allocated to dividends. Merck & Co Inc's dividend payout ratio as of December 31, 2023, is 1.97, which may raise concerns about the sustainability of the dividend. However, the company's profitability rank is strong at 8 out of 10, reflecting robust earnings potential in comparison to its peers. The firm's consistent track record of positive net income over the past decade further supports its financial health.
Growth Metrics: The Future Outlook
Merck & Co Inc's growth rank is impressive at 8 out of 10, suggesting a solid growth trajectory. The company's revenue per share and 3-year revenue growth rate of 13.00% annually outperforms 71.01% of global competitors. Despite a -20.20% average annual 3-year EPS growth rate, the company still outperforms 16.79% of global competitors. The 5-year EBITDA growth rate of -6.90% also outperforms 21.64% of global competitors, indicating the company's potential for future growth.
Next Steps
Considering Merck & Co Inc's consistent dividend payments, an upward trend in dividend growth rate, and a reasonable payout ratio, the company presents a compelling case for income-focused investors. Coupled with strong profitability and growth metrics, Merck & Co Inc appears to be in a good position to sustain its dividends. However, the long-term sustainability of these dividends will depend on the company's continued financial performance and strategic growth initiatives. Investors may want to monitor the company's future earnings reports and strategic developments closely. For those seeking high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener to discover similar investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
