We are continuing our 2025 investment challenge with only £10 a week, and although it is only the second week of the year, we could not wait to start the challenge and this is our third purchase for our dividend stocks pie. You can check the full review of our first high yield dividend stock, and our second purchase, another great dividend stock. For third week of the challenge or better said, our third stock will be a more than known pharmaceutical stock: Bristol-Myers Squibb Company (BMY). This global biopharmaceutical leader is renowned for its innovative therapies and commitment to rewarding shareholders, making it a solid choice for dividend-focused investors, and that is what we are on this particular investment challenge.
Why Bristol-Myers Squibb?
Bristol-Myers Squibb (BMY) is a prominent player in the healthcare industry, specialising in developing treatments for oncology, cardiovascular disease, and immunology. They have a diverse portfolio of high-margin drugs and a robust pipeline, so the company has a strong foundation for sustainable growth. As of December 2024, Bristol-Myers Squibb’s stock is trading at approximately $56.56, with an annual dividend yield of 4.24%.
Dividend Overview
For the purpose of the “£10-a-week Dividend Pie” challenge, we are focusing on dividends, we prioritise companies with reliable and rewarding dividend policies. Bristol-Myers Squibb fits this profile perfectly:
- Current Dividend: The company pays an annualised dividend of $2.40 per share, distributed quarterly, that has just been raised to $0.62 per quarter.
- Yield: With a yield of 4.24%, BMY provides an attractive income stream, supported by its strong financial performance, so hopefully we can also some capital appreciation.
- Payout Date: The latest ex-dividend date was January 3, 2025, with a payment date set for February 1, 2025. Purchasing shares before that ex-dividend date ensures our eligibility for this payout.
Dividend Growth
As we have said in our purchases, we are more interested in the dividend growth than the actual dividend yield and Bristol-Myers Squibb has a commendable track record of maintaining and growing its dividend. Over the past five years, the company has increased its dividend at a compound annual growth rate (CAGR) of approximately 6%.
Dividend Security
The most important for dividend income investors is ensuring that the dividends are safe, and for that we have found several factors to contribute to the security of Bristol-Myers Squibb’s dividend:
- Diverse Revenue Streams: With blockbuster drugs like Eliquis and Opdivo, BMY generates significant and stable revenue from multiple sources.
- Strong Cash Flow: The company’s operational efficiency ensures robust free cash flow, supporting its ability to pay and grow dividends.
- Strategic Acquisitions: Recent acquisitions, including Celgene, have strengthened BMY’s product portfolio and pipeline, providing a platform for future growth.
Risks and Considerations
However, as with every investment, nothing comes without risks and Investors should be mindful of the risks associated with BMY too:
- Patent Expirations: Like many pharmaceutical companies, BMY faces potential revenue declines as key drug patents expire.
- Pipeline Execution: The success of its drug pipeline is critical for offsetting losses from expiring patents and maintaining revenue growth.
- Regulatory Challenges: Changes in healthcare regulations or pricing pressures may impact profitability.
Despite these risks, we have the opinion that Bristol-Myers Squibb’s diversified portfolio and strong financials provide a solid foundation for sustaining its dividend.
Why Bristol-Myers Squibb Fits the £10-a-Week Challenge
Bristol-Myers Squibb’s combination of a robust dividend yield, consistent growth, and strong fundamentals makes it an excellent addition to our dividend-focused portfolio. Its position in the resilient healthcare sector adds an element of stability to the “£10-a-week Dividend Pie.”
Incorporating Bristol-Myers Squibb Company into our “£10-a-week Dividend Pie” exemplifies our strategy of selecting high-quality, dividend-paying stocks with proven resilience and growth potential. BMY’s stable revenue streams and shareholder-friendly policies make it a compelling choice for income-oriented investors.
As always, remember that investing in individual stocks carries risks. Consult a financial advisor to ensure your investment strategy aligns with your goals and risk tolerance. This challenge represents our personal investment journey and is not financial advice.
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