Assessing the Sustainability and Growth of Amgen Inc's Dividends
Amgen Inc (AMGN, Financial) recently announced a dividend of $2.25 per share, payable on 2024-03-07, with the ex-dividend date set for 2024-02-15. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Amgen Inc's dividend performance and assess its sustainability.
Understanding Amgen Inc's Business Model
Amgen is a leader in biotechnology-based human therapeutics. Flagship drugs include red blood cell boosters Epogen and Aranesp, immune system boosters Neupogen and Neulasta, and Enbrel and Otezla for inflammatory diseases. Amgen introduced its first cancer therapeutic, Vectibix, in 2006 and markets bone-strengthening drug Prolia/Xgeva (approved 2010) and Evenity (2019). The acquisition of Onyx bolstered the firm's therapeutic oncology portfolio with Kyprolis. Recent launches include Repatha (cholesterol-lowering), Aimovig (migraine), Lumakras (lung cancer), and Tezspire (asthma). The 2023 Horizon acquisition brings several rare disease drugs, including thyroid eye disease drug Tepezza. Amgen also has a growing biosimilar portfolio.
Amgen Inc's Dividend Track Record
Amgen Inc has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Furthermore, Amgen Inc has increased its dividend each year since 2011, earning it the title of a dividend achiever, a distinction reserved for companies that have consistently increased their dividends for at least 13 consecutive years. Below is a chart showing annual Dividends Per Share to track historical trends.
Dividend Yield and Growth Analysis of Amgen Inc
As of today, Amgen Inc currently has a 12-month trailing dividend yield of 2.92% and a 12-month forward dividend yield of 3.09%. This indicates an expectation of increased dividend payments over the next 12 months. Over the past three years, Amgen Inc's annual dividend growth rate was 10.00%. When extended to a five-year horizon, this rate increased to 10.10% per year. Over the past decade, Amgen Inc's annual dividends per share growth rate stands at an impressive 15.40%. Based on Amgen Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Amgen Inc stock as of today is approximately 4.72%.
Evaluating the Sustainability of Amgen Inc's Dividend
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Amgen Inc's dividend payout ratio is 0.47. Amgen Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Amgen Inc's profitability 9 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Amgen Inc's Growth Prospects
To ensure the sustainability of dividends, a company must have robust growth metrics. Amgen Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Amgen Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Amgen Inc's revenue has increased by approximately 6.70% per year on average, a rate that outperforms approximately 52.37% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Amgen Inc's earnings increased by approximately 14.90% per year on average, a rate that outperforms approximately 56.44% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 5.30%, which outperforms approximately 42.95% of global competitors.
Concluding Thoughts on Amgen Inc's Dividend Outlook
In conclusion, Amgen Inc's consistent dividend payments, coupled with a robust dividend growth rate, moderate payout ratio, strong profitability, and solid growth metrics, paint a positive picture for the company's dividend sustainability. With a history of increasing dividends and a promising future outlook, Amgen Inc stands out as a potential candidate for value investors seeking income-generating investments. As the biotech sector continues to innovate and expand, Amgen Inc's strategic initiatives may further bolster its financial strength, potentially leading to continued dividend growth. Will Amgen Inc maintain its trajectory and reward shareholders with increasing dividends in the years to come? Only time will tell, but current indicators suggest a favorable outcome. For those interested in exploring more high-dividend yield opportunities, GuruFocus Premium users can utilize the High Dividend Yield Screener for their investment research.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
