Big pharmaceutical firm Merck (NYSE: MRK) is adding a dollop of change to its dividend. The company announced that it will raise its quarterly distribution by $0.01, or 2%, to $0.47 per share. Merck is a habitual dividend raiser. Since nearly the beginning of this decade, it has incrementally hiked its payout once every year.
The company has some eventful quarters in front of it. It’s got a potential blockbuster drug in Keytruda, an immunotherapy treatment for a type of lung cancer. In an encouraging win for Merck, Keytruda was recently approved by the Food and Drug Administration as an initial treatment option for certain patients.
Additionally, at the end of last month, the company filed for FDA approval of MK-1293, a biosimilar to Sanofi‘s blockbuster insulin treatment Lantus. In 2015, Lantus reaped over $6 billion in sales for Sanofi, making it one of the hottest drugs around; if MK-1293 comes to market before long, Merck has an excellent chance of capitalizing on this popularity.
On the other hand, the pharma giant is on the patent cliff for several of its top products. These include autoimmune disease treatment Remicade, Cubicin, which treats flesh-eating bacteria, and cholesterol-lowering drug Zetia. Perhaps it’s no wonder, then, that the company is being cautious with its dividend raises.
Merck’s new payout is to be dispensed on Jan. 9 to stockholders of record as of Dec. 15. At the most recent closing share price, it would yield just over 3%, which is generous for the healthcare sector. It’s also higher than the current 2.1% average of dividend-paying stocks on the S&P 500.
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Eric Volkman has no position in any stocks mentioned.
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