Current Dividend Yield: 3.9%
Performance So Far in 2012: +17%
Merck (NYSE:MRK), just like Pfizer, is a Big Pharma play that delivers in a big dividend way.
But, just like Pfizer, it faces a threat in the form of patent expirations.
Merck’s Singulair — an asthma drug that generates $5 billion in annual sales for the company — went off-patent this year, and in August, the FDA gave the green light to 10 pharmaceutical companies to sell generic forms of the drug.
Still, that hasn’t caused much pain in MRK’s share price, as investors have found other reasons for optimism.
For one, the company got good news earlier this year about a new osteoporosis drug, odanacatib — which is meant to treat post-menopausal women – that powered MRK shares through most of their year-to-date gains. It’s also going after billions of dollars in the Alzheimer’s treatment market with MK-8931, a BACE inhibitor, which it is putting through mid-stage trials this month. And while Merck’s sales in the most recent quarter declined thanks to plummeting sales of Singulair, improving revenues from Januvia — its diabetes drug — helped offset some of the pain.
MRK isn’t going anywhere. It’s continued roll-in of a 2009 buyout of Schering-Plough will help keep Merck’s product line rolling, and a huge war chest of almost $15 billion in cash and short-term investment will keep the plump dividend payouts coming.