Merck, J&J, Baxter Provide Healthy Dividend Stream


Drugmakers aim to help people live healthier lives, but they aren't immune to patent losses.

Merck ( MRK ), which has recently faced a number of patent expirations, on Tuesday reported Q2 sales that slowed for an eighth quarter in a row. But earnings climbed 1% to 85 cents a share for its third straight quarter of gains.

Results beat views on both the top and bottom lines.

Last month Merck said it's buyingIdenix Pharmaceuticals ( IDIX ), which would give it access to three hepatitis C drugs that are currently in development. Two of those belong to the same broad class asGilead Sciences ' ( GILD ) blockbuster, Sovaldi.

Merck currently pays a quarterly dividend of 44 cents a share, or $1.76 for the full year. That works out to an annualized yield of 3%, above the S&P 500's 1.9%. Its three-year Earnings Stability Factor is 4 on a scale of 0 (most stable) to 99 (most volatile). The stock has been trading sideways since climbing past a 59.13 cup-with-handle buy point on June 20.

Among other medicals,Johnson & Johnson ( JNJ ) on July 15 reported Q2 results that also beat views. Its strong results were led by its Olysio hepatitis C drug. J&J boasts a stable Earnings Stability Factor of 1 for both three and five years. Analysts expect profit to grow 7% this year and 7% the next.

Its quarterly dividend of 70 cents a share, or $2.80 for the year, yields 2.7% on an annualized basis. The stock rose as much as 13% from a cup base it cleared in November, but has pulled back below its 50-day moving average and is 4% off its high.

Baxter International ( BAX ), a maker of devices and drugs to treat hemophilia and other conditions, pays out a 52-cent quarterly dividend ($2.08 for the year), which also works out to a 2.7% yield. On July 17, the company reported Q2 results that topped views.

Baxter gets a 0 for its three-year Earnings Stability Factor. The stock, which recently cleared a series of bases, is trading just above the 75.98 buy point of its latest flat base.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: MRK , IDIX , GILD , JNJ , BAX

Investor's Business Daily

Investor's Business Daily

More from Investor's Business Daily:

Related Videos



Most Active by Volume

  • $17.98 ▲ 0.28%
  • $91.29 ▲ 2.06%
  • $7.26 ▼ 1.22%
    $8.33 unch
  • $4.19 ▼ 1.18%
  • $25.83 ▼ 0.19%
  • $7.60 ▼ 1.43%
  • $112.01 ▼ 0.47%
As of 12/24/2014, 02:12 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by