A Comprehensive Review of Upcoming and Historical Dividend Performance
Merck & Co Inc (MRK, Financial) recently announced a dividend of $0.77 per share, payable on 2024-07-08, with the ex-dividend date set for 2024-06-17. 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?
Merck & Co Inc manufactures pharmaceutical products to treat several conditions in a number of therapeutic areas, including cardiometabolic disease, cancer, and infections. Within cancer, the firm's immuno-oncology platform is growing as a major contributor to overall sales. The company also has a substantial vaccine business, with treatments to prevent pediatric diseases as well as human papillomavirus, or HPV. Additionally, Merck sells animal health-related drugs. From a geographical perspective, just under half of the company's sales are generated in the United States.
A Glimpse at Merck & Co Inc's Dividend History
Merck & Co Inc has maintained a consistent dividend payment record since 1985, distributing dividends on a quarterly basis. The company has increased its dividend each year since then, earning it the status of a dividend aristocrat—a title given to companies that have increased their dividend annually for at least the past 39 years.
Breaking Down Merck & Co Inc's Dividend Yield and Growth
Merck & Co Inc currently has a 12-month trailing dividend yield of 2.32% and a forward dividend yield of 2.38%, indicating an expected increase in dividend payments over the next 12 months. However, with a yield near a 10-year low and underperforming 39.76% of global competitors in the Drug Manufacturers industry, the dividend yield may not appeal strongly to income investors. Over the past three years, Merck & Co Inc's annual dividend growth rate was 6.10%, extending to 8.00% per year over five years, and a decade-long growth rate at 6.00%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. Merck & Co Inc's dividend payout ratio as of 2024-03-31 is 1.38, which may suggest concerns about dividend sustainability. However, the company's profitability rank of 8 out of 10 indicates good profitability prospects, supported by a decade of positive net income.
Growth Metrics: The Future Outlook
Merck & Co Inc's robust growth metrics are essential for sustaining dividends. The company's growth rank of 8 out of 10, combined with a 3-year revenue growth rate of approximately 13.00% per year, outperforms 69.77% of global competitors. However, the 3-year EPS growth rate shows an average annual decrease of -20.20%, and the 5-year EBITDA growth rate also decreased by -6.90%, indicating some areas of concern in earnings performance.
In conclusion, while Merck & Co Inc's dividends are attractive due to their consistency and growth, potential investors should be cautious about the sustainability issues indicated by the payout ratio and mixed growth metrics. For those seeking high-dividend yield stocks, consider using the High Dividend Yield Screener available to GuruFocus Premium users.
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.
