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Merck (NYSE:MRK) Is Increasing Its Dividend To $0.85

Simply Wall St · 4d ago

Merck & Co., Inc. (NYSE:MRK) will increase its dividend from last year's comparable payment on the 8th of January to $0.85. This takes the dividend yield to 3.3%, which shareholders will be pleased with.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Merck's Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by Merck's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 37.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
NYSE:MRK Historic Dividend December 2nd 2025

View our latest analysis for Merck

Merck Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $1.80, compared to the most recent full-year payment of $3.40. This works out to be a compound annual growth rate (CAGR) of approximately 6.6% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Merck has seen EPS rising for the last five years, at 15% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Merck's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Merck that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.