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Amgen Returns More to Shareholders, Hikes Dividend by 27%

Biotech major, Amgen Inc.AMGN declared about a 27% increase in its quarterly dividend. The company announced a dividend of $1.00 per share for the first quarter of 2016, payable on Mar 8, 2016, to shareholders of record as of Feb 16, 2016. This represents an increase from 79 cents per share paid in each of the previous four quarters.

This latest hike reaches the company's yearly dividend to $4.00 per share, reflecting a forward yield of nearly 2.5% based on the raised dividend and the stock's last closing price of $162.62 (Dec 15, 2015). Moreover, the hike is in accordance with the company's dividend guidance for 2016 provided during the last quarter (third-quarter 2015) earnings.

We note that Amgen started paying dividends in 2011 and has been consistently increasing the payout since then. In addition to paying dividends, Amgen pursues an effective share repurchase program to increase shareholder's value. In the first nine months of 2015, the company purchased shares worth $1.7 billion. Amgen intends to buy back shares worth $2-$3 billion in 2016.

The company intends to return about 60% of its adjusted net income in the form of dividend payouts and share buybacks through 2018. We believe that Amgen's consistent dividend payments and increments reflect the company's earnings potential as well as cash flow generation capabilities.

Other companies in the biotech sector like Gilead Sciences Inc. GILD and AbbVie Inc. ABBV are also known for returning value to shareholders in the form of dividends. In its third-quarter 2015 earnings release, AbbVie announced a 12% increase in its quarterly dividend for 2016. Notably, AbbVie has raised its dividend by more than 42% since 2013.

Amgen is a Zacks Rank #3 (Hold) stock. A better-ranked stock in the health care sector is Achillion Pharmaceuticals, Inc. ACHN with a Zacks Rank #1 (Strong Buy).

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


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

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