Current Dividend Yield: 3.8%
Performance So Far in 2012: +16%
Merck apparently has answered one of the big questions about its pipeline, however, judging by a big jump in shares this summer. A new osteoporosis drug looks very promising for the drugmaker and investors have piled in, driving up shares about 14% in just a month’s time. It’s now double the Dow Jones’ gains year-to-date in 2012 despite being relatively sluggish before that.
Additionally, 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.
Like 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.
Earnings were ho-hum in the latest quarter, but the income potential of this dividend payer is a decent hedge. 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.