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Merck: Amazing Oncology Division, Underwhelming Dividend Opportunity

Published Thu, 09 Jul 2020 10:09:44 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | Healthcare Merck: Amazing Oncology Division, Underwhelming Dividend OpportunityJul. 9, 2020 10:09 AM ET|| About: Merck & Co., Inc. (MRK), Includes: ABBV, JNJ, PFEby: The Dividend PortfolioThe Dividend Portfolio Dividend investing, dividend growth investing, value, long-term horizonSummaryMerck, an international pharmaceutical company, has experienced strong growth of key financial metrics over the last few years driven by the success of some of their key blockbuster including Keytruda.
This has resulted in a strong growth of Merck's oncology division over the last few years, which has significantly outperformed competitors during the same time period.
However, most of Merck's other pharmaceutical divisions have experienced broad declines over the last few years, and the company faces potential challenges from their dependence on Keytruda.
Furthermore, recent challenges covering the dividend with free cash flow and the dividend growth opportunities of other pharmaceutical companies don't necessarily make Merck's dividend very appealing.
Taken together, I believe that Merck is fairly valued and has the potential to grow, though I believe that there are better dividend growth opportunities in the pharmaceutical industry.
Merck (MRK) is a major international pharmaceutical company with a history of experiencing extended growth and decline phases. From the early 2000s to the mid-2010, Merck faced challenges from settlements, divestitures, and the loss of their exclusivity of key patents. Recently, the success of some of Merck's blockbuster therapeutics, especially Keytruda, has resulted in strong growth of key financial metrics over the last few years. This has led to significant sale increases for Merck's oncology and vaccine divisions over the last five years, with more opportunities for these divisions to expand moving forward. However, Merck faces challenges growing its other pharmaceutical divisions and needs to... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ABBVIE 70.83   26.0 2.72 4.28 6.28
PFIZER 37.28   17.0 2.19 1.44 3.85
JOHNSON & JOHNSON 130.43   21.6 6.03 3.80 2.93

ABBVIE - ABBV
ABBVIE - ABBV  


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