Key Takeaways:
- Amgen currently offers a 3.6% dividend yield, which is nearly the highest yield the stock has offered in the past year.
- The dividend looks safe, with a low 45% payout ratio and strong earnings backing it.
- Based on current analyst price targets, Wall Street thinks the stock has nearly 20% upside today.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
If you’re looking for reliable, undervalued dividend stocks today, Amgen (AMGN) stock is worth a closer look.
The company has increased its dividend for over a decade, and its yield is now sitting near the high end of its historical range.
While much of the market is chasing hype and high-growth names, Amgen stands out as a steady, no-drama option for long-term dividend investors. It may not be exciting, but it pays to be boring sometimes.
Why Is Amgen Down Over 10% in the Past Year?
Amgen is down about 13% in the past year, making the stock look cheap today.
Here’s why the stock is down:
- Weak short-term earnings growth: EPS growth has slowed, and investors haven’t been thrilled with the pace of profit expansion compared to peers.
- Concerns around drug pipeline: Some investors are worried about Amgen’s long-term growth potential, especially as competition increases in key therapy areas.
- Weight-loss drug buzz has overshadowed biotech: The market has been focused on GLP-1 names like Eli Lilly (LLY) and Novo Nordisk (NVO), and anything not in that space has lagged.
- Acquisition digestion: Amgen’s $28 billion acquisition of Horizon Therapeutics closed recently. While it’s expected to be accretive over time, investors might still be waiting for the acquisition to play out.
Analysts Think the Stock Has Nearly 20% Upside Today
A total of 26 Wall Street analysts have an average price target of $315/share for Amgen stock, which implies that they think the stock has nearly 20% upside today.
You can also see that the stock’s price targets have been fairly stable over the past year, which might mean that the market has overreacted with the recent sell-off.
See why Amgen could be undervalued today with TIKR (It’s free) >>>
1: Dividend Yield
Amgen’s forward dividend yield currently sits around 3.6%, which is well above its 5-year average of 3.2%. A 3% dividend yield doesn’t sound impressive, but this actually makes it one of the higher-yielding stocks in the large-cap healthcare space.
The dividend is safe today, and analysts expect the company to continue growing earnings at an acceptable rate for years.
The stock offers a relatively high yield for patient investors and looks cheap today.
2: Dividend Safety
Amgen’s dividend is safe today because it’s backed by strong earnings that are expected to grow.
At the end of 2024, the company had a 45% dividend payout ratio, which indicates that Amgen has a low risk of cutting its dividend.
Earnings and dividends are both expected to grow meaningfully for years.
See Amgen’s full growth forecast and analyst estimates. (It’s free) >>>
3: Dividend Growth Potential
Amgen has grown its dividend every year for over a decade, but the rate of growth has slowed down a bit recently.
Amgen’s dividend grew about 10% annually from 2019 through 2023 but is now expected to grow around 6–7% annually.
Additionally, earnings-per-share are expected to continue averaging about mid-single-digit growth rates going forward.
Keep in mind that mid-single-digit annual EPS and dividend growth is actually pretty decent for large-cap, blue-chip companies like Amgen. This reaffirms that Amgen might be worth a closer look for dividend investors today.
TIKR Takeaway
Amgen looks like a dependable dividend stock for investors who want exposure to the healthcare space. Additionally, the stock is offering a higher dividend yield than usual today, which suggests the stock might be temporarily undervalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
