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Bristol-Myers Squibb Company (NYSE:BMY) has announced that it will be increasing its periodic dividend on the 3rd of February to $0.62, which will be 3.3% higher than last year's comparable payment amount of $0.60. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns.
See our latest analysis for Bristol-Myers Squibb
Bristol-Myers Squibb's Future Dividend Projections Seem Positive
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Even though Bristol-Myers Squibb isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.
Analysts expect a massive rise in earnings per share in the next year. If the dividend extends its recent trend, estimates say the dividend could reach 55%, which we would be comfortable to see continuing.
Bristol-Myers Squibb Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from $1.44 total annually to $2.40. This implies that the company grew its distributions at a yearly rate of about 5.2% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
Bristol-Myers Squibb May Find It Hard To Grow The Dividend
Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Unfortunately, Bristol-Myers Squibb's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.
Our Thoughts On Bristol-Myers Squibb's Dividend
Overall, we always like to see the dividend being raised, but we don't think Bristol-Myers Squibb will make a great income stock. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We don't think Bristol-Myers Squibb is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for Bristol-Myers Squibb that investors should know about before committing capital to this stock. Is Bristol-Myers Squibb not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.