U.S. global pharmaceutical company Amgen Inc. (AMGN, Financial) has authorized the payment of a quarterly dividend for the second quarter of fiscal 2018. The company says it will pay its shareholders a cash dividend of $1.32 per share.
Shareholders of Amgen will pocket the quarterly free cash flow distribution on June 8. The recipient must be on the company’s dividend record no later than May 17 to benefit. The ex-dividend date is scheduled for May 16.
The next quarterly dividend is on par with the previous one. If Amgen will hold it constant, the current $1.32 per share quarterly cash distribution will result in a 12-month dividend of $5.28 for a forward yield of 2.82%. The forward dividend yield has been computed based on Amgen’s market value on the stock market, as of March 7.
With the second quarter dividend, Amgen will have distributed a trailing 12-months dividend of $4.94 for a current dividend yield of 2.63%. This is 0.84 percentage points higher than the Standard & Poor's 500 dividend yield of 1.79%.
Amgen is dispersing part of its free cash flow to the holders of the stock based on a 171% pay-out ratio, which is abnormally beyond the industry median of 28%. However, financial solidity speaks loud at Amgen with $41.68 billion in cash on hand and securities, or $57.84 per share, and with $8.5 to $9 billion of levered free cash flow. The portion of levered free cash flow is about 75% of the cash flow Amgen can generate from its operations in a 12-month period.
The operating cash inflow that Amgen will use to support the dividend payment, will be determined by earnings that analysts predict to be $3.46 (+5.8% year over year) per share of the company on a quarterly revenue projected at $5.71 billion (-1.6% from fiscal 2017).
The debt to equity ratio is 140.02%. However, the interest coverage is 11.84. This is well above the 1.5 threshold that investors believe to be the borderline between the company with and without problems in paying the interest expenses on the outstanding debt.
Amgen is currently at $187.53 per share traded on the Nasdaq stock exchange. As of March 7, the healthcare stock has a market capitalization of $135.13 billion.
The stock – as illustrated in the Yahoo Finance’s chart – gained nearly 5.5% for the 52-weeks through March 7, however, its performance has been beaten by the S&P 500. The index gained 15.4% over the same span of time.
Source: Yahoo Finance
Amgen is trading above the 200, 100 and 50-SMA lines. The 52-weeks range is $152.16 to $201.23 per share.
The relative strength indicator (14-days) is 55.69 of a 20 to 80 range.
Amgen has a price-book ratio of 5.37 versus an industry median of 4.20 times and a price-sales ratio of 6.03 versus an industry median of 11.11 times.
The PE ratio is 70.77 times versus an industry median of 28.26 times. The forward PE ratio is 14.18 that, multiplied by a weighted (quarters) average of $13.57 for full fiscal years 2018 and 2019, yields to a value of $192.46 per share of Amgen. The average target price is $196.27 per share, and the recommendation rating is 2.4 out of 5.
As of March 2018, 15 analysts out of a total of 25 recommend holding shares of Amgen, while 10 analysts are for a buy to strong buy investing approach.
The Vanguard Group, Inc., leads the top institutional holders’ ranking with 7.26% of total shares outstanding of Amgen.
The Vanguard Group, Inc. is followed by FMR, LLC with 7.20% and Capital Research Global Investors with 7.07%. These figures are as of Dec. 30, 2017.
(Disclosure: I have no position in Amgen.)
