Healthcare company Amgen (NASDAQ:AMGN) announced last week that it would be raising its dividend for 2023. Its Board of Directors declared a quarterly dividend of $2.13, which will be paid out on March 8, 2023, and it will represent a 10% increase from the company's current dividend ($1.94).
Over a five-year period, Amgen, with this latest increase, has now boosted its payouts by more than 61%, which comes out to an average compounded annual growth rate of 10%. That's a positive sign that the rate of increases remains steady, suggesting that Amgen's business is in solid shape. Amgen's payout ratio is around 60%, which should also give investors confidence in the ability for Amgen to continue making more increases in the future given its strong financials.
Investors will now be earning a yield of 3.2% from the healthcare stock. On a $25,000 investment, that would mean annual dividend income of around $800.
Earlier this month, Amgen also announced plans to acquire Horizon Therapeutics (NASDAQ:HZNP) for $26.4 billion. Horizon develops medicine that helps with rare diseases. Its top-selling product is Tepezza, which treats symptoms related to thyroid eye disease.
Shares of Amgen have been falling since all this news but year to date, it has still been one of the safer stocks to invest in as it has risen more than 18% in value while the S&P 500 is down close to 20%.
Trading at 22 times earnings, Amgen's valuation is in line with the average healthcare stock. With a good valuation, improved growth prospects, and a high yield, Amgen makes for a solid investment to buy and hold right now.
