1 Dividend Growth Stock to Buy and Hold for 10 Years
1 Dividend Growth Stock to Buy and Hold for 10 Years
If there is one thing income investors like more than regular dividend payouts, it's regular and growing dividend payouts. Not every corporation can offer that, of course. Some will eventually suspend their dividend programs or, at the very least, decrease their payouts.
Fortunately, there are stocks on the market that look committed to returning capital to their shareholders by way of consistent dividend increases. That's what income seekers are after. Let's consider one excellent dividend growth stock worth sticking with through the next decade: Amgen (NASDAQ: AMGN).
Amgen's dividend record
Amgen is one of the largest biotech companies in the world. It boasts a deep lineup of medicines, nine of which generated at least $1 billion in sales last year. Selling lifesaving drugs isn't a business that's likely to fall out of style anytime soon. Amgen's success in this field has been the major driver behind its long-term performance and regular dividend increases. True, the past isn't a guarantee of future success.
But it is still worth highlighting that Amgen has an excellent dividend track record -- something that points to an underlying culture within the company that can lend itself to future success. In the past 10 years, Amgen has increased its dividends by an impressive 269%. The drugmaker's forward yield of 2.83% is well above the S&P 500's average of 1.35%. Amgen's cash dividend payout is about 65%. That looks a little high, but not prohibitively so. Its latest dividend increase was recent -- in the first quarter.
So, Amgen has clearly shown a commitment to growing its payouts, but can the company's financial performance support its dividend program moving forward?
Why the future is bright
The path forward is clear for Amgen. The company has to develop newer, innovative medicines that can boost its revenue and earnings growth.
One area the biotech has been working on is weight loss therapies, arguably the most high-profile field in the industry right now. Drugmakers are pouring millions into developing anti-obesity medicines. Why? Thanks to important and relatively recent breakthroughs, sales of weight loss drugs are projected to skyrocket through the end of the decade.
Though Amgen is currently trailing the leaders in this field, it is making steady progress. The biotech's phase 2 asset, MariTide, looks relatively promising. Recent phase 1 data showed that MariTide helped reduce body weight in patients and kept it down for as long as 150 days after the treatment ended -- a key benefit.
It's far too early to crown MariTide as the next big thing in weight loss treatment, especially considering the ruthless competition. However, Amgen is doing precisely what it is expected to do. The company has other weight loss assets in development. It also boasts a deep pipeline beyond this area, with a few dozen candidates in total.
Quantity matters in the biotech industry. Many programs in phase 1 studies never make it to the market, so it's almost essential to diversify. Most of the largest and most successful drugmakers have deep pipelines. That also goes for Amgen. Further, the company can also count on acquisitions to boost its prospects. Last year, it closed the acquisition of Horizon Therapeutics for about $28 billion.
Amgen got its hands on Tepezza through the deal, the first drug approved by the U.S. Food and Drug Administration for thyroid eye disease (TED). Tepezza wasn't performing as well as Horizon Therapeutics had hoped. However, Amgen's greater expertise in marketing than Horizon's, and the former's larger cash balance, should allow it to make meaningful progress here. And that's not to mention the pipeline candidates Amgen also acquired thanks to this transaction.
Amgen should succeed in growing its revenue and earnings at a good clip as it expands its lineup of approved drugs. The company's underlying business remains solid, and long-term investors have good reason to consider buying shares of this top dividend growth stock.
Should you invest $1,000 in Amgen right now?
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.