Summary
- Merck's second quarter produced very good top and bottom line results.
- Keytruda has a long runway for growth and is under patent protection for quite some time.
- The most recent dividend increase was vastly superior to previous raises.
- Between an improving business and increased dividend growth, I remain very bullish on Merck.
- Shares of Merck & Company (MRK) have simply trounced the S&P 500 index over the last year.
Source: YCharts
Merck, one of the world’s largest healthcare companies, has done very well for investors against the market index over the last 12 months, even when accounting for several steep declines during this time period.
But there are two reasons why I still find shares of the company attractive. The first is the company’s pharmaceutical products, especially Merck’s cancer fighting drug Keytruda, are seeing high rates of growth.
The second reason I find Merck attractive is its most recent dividend increase. Since the company started increasing its dividend in 2012, the company has mostly stuck to a $0.01 per quarter raise each year. This amounted to a roughly 2% annual increase. Merck’s most recent dividend increase was for nearly 15%.
With a portfolio of pharmaceuticals growing at a double-digit clip and a dividend increase that was 7x the normal amount, I remain extremely intrigued by Merck.
