Current Dividend Yield: 4.4%
Performance So Far in 2012: +1%
Merck (NYSE:MRK) is very similar to Pfizer (NYSE:PFE) in many ways, though it actually has underperformed the market year-to-date thanks to a slide in the last few weeks after approaching a new 52-week high. It too faces patent expirations. It too is hoping its pipeline will step up to fill the void. And it too pays a huge dividend.
There obviously is not breakneck growth in pharmaceuticals, at least on a share appreciation basis. But the continued roll-in of the $41 billion Schering-Plough buyout from a few years ago surely will provide new opportunities for Merck. At the very least, it ensures the company won’t fade away.
And like its cohort Pfizer, MRK is sitting on a huge war chest. Some $13.5 billion in cash and $1.4 billion in short-term investments keeps this pick pretty safe when it comes to writing the checks.
Dividends have been paid at Merck since 1935, and last year the payout was increased about 10%, from 38 cents a quarter to 42 cents. You might not find massive share appreciation in this stock, but you certainly will find stability.