A Consolidating Preserver of Dividends - Merck (MRK)
Article Submitted By: Sean Riskowitz
Merck (MRK) is one of the best positioned pharma stocks, with a high and consistent dividend and an attractively priced common stock.
The pharmaceutical sector has traditionally been a good payer of dividends and one stock to consider is industry giant Merck & Co (MRK).
Following the merger of the Merck (MRK) and Schering-Plough businesses in 2009, the combined business is now the world’s second largest pharmaceutical company and is regarded as a global leader in consumer products and animal care.
Post the merger, the company offers dividend seeking investors something to consider, trading on a historic dividend yield of 4.2% and a price to earnings (PE) multiple of 8.2 times earnings.
The company was also recently included in the "sane portfolio" put together by John Dorfman, chairman of Thunderstorm Capital when asked to identify stocks he felt would serve investors well in turbulent market conditions.
As far as dividends go, the company has a solid track record having paid a dividend every year since 1969.
Reporting earnings recently the company said that global sales for the second quarter of 2010 came in at $11.3bn with net income for the quarter was $752m. The sales figure was up strongly from the $5.9bn assisted by the merger.
There is a lot of corporate action taking place in the global pharmaceutical sector with a number of acquisitions and mergers dominating the landscape. Manufacturers and research houses are working hard to contain their costs while looking to bring on board further product lines.
Merck (MRK) is no different and has also indicated it will be tidying up its portfolio over the next year. While it has expanded its presence in the key Chinese market with a 400,000 square foot site in Hangzhou, it has begun an aggressive cleanup of many of its other facilities and expects to cut its workforce by 15% over the next year.
This includes integration plans for the company's research and development, manufacturing and other business operations as part of a global restructuring program announced the company announced in November 2009, following the merger of Merck (MRK) and Schering-Plough. Total savings are expected to come in around $3.5bn by 2012 by phasing out operations at eight research sites and eight manufacturing site.
With consolidation the name of the game in the pharmaceutical sector, investors looking for dominant players with market leading technology and strong dividend track records may do well to consider Merck (MRK) for their portfolio.
