Is Bristol Myers Squibb’s 4.4% Dividend Worth Buying?
Key Points
Bristol Myers has historically been a reliable and safe dividend stock for investors. However, a strong track record does not guarantee that future dividend payments will remain secure. The company is facing an uncertain future due to several patent cliffs, which could impact its revenue and financial stability.
Investors have shown interest in dividend stocks in 2026, as they can provide consistent income and offer a level of stability. While many dividend-paying companies have strong financials, this doesn’t mean their dividends are guaranteed. Bristol Myers Squibb (NYSE: BMY) is a leading healthcare company known for its generous dividend, currently yielding 4.4%, significantly higher than the S&P 500 average of 1.2%. At first glance, it may seem like an attractive investment, but with looming patent cliffs and uncertainty about its future, this may not be the case.
The Past Doesn’t Predict the Future When It Comes to Dividends
One common mistake investors make when evaluating dividend stocks is placing too much emphasis on their historical performance. While long dividend streaks are impressive, they can be broken, and company policies can change, especially during times of financial difficulty.
Bristol Myers is currently facing significant challenges due to patent cliffs on key drugs such as Eliquis and Opdivo. As generic competition increases, the company’s revenue could decline, leading to lower earnings and reduced cash flow. This might make it difficult to sustain current dividend payments. Additionally, the company may need to pursue acquisitions to offset these losses, which could further strain its financial resources.
Last year, Bristol Myers reported flat revenue at $48.2 billion. For this year, the company is forecasting revenue between $46 billion and $47.5 billion.
Why I’d Go Elsewhere in Search of Dividends
Despite Bristol Myers’ 17-year consecutive dividend increase, a payout ratio of 72%, and a high yield, it is not an income investment I would add to my portfolio today. There is too much uncertainty surrounding the company’s future, and while a dividend cut or suspension isn’t certain, it remains a possibility depending on how the company navigates its challenges.
Bristol Myers’ business is stable now, but I don’t have enough confidence to consider it a “buy-and-hold” stock. Dividend stocks should be investments you don’t have to worry about constantly. Instead of hoping Bristol Myers continues to perform well and maintain its dividend, I would recommend considering an index fund that offers dividends as a more diversified and stable option.
Should You Buy Stock in Bristol Myers Squibb Right Now?
Before investing in Bristol Myers Squibb, it’s important to consider the following:
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.
