Key Takeaways
- Bristol Myers Squibb yields 4.3% and Merck yields 2.4%, and both raised their 2026 sales outlooks with their second-quarter results.
- Over the twelve months to June 30, 2026, Bristol Myers paid out 45% of its free cash flow as dividends, compared with 52% at Merck.
- Merck raised its dividend 5.1% in fiscal 2025, compared with 2.9% at Bristol Myers, and it has the stronger interest coverage.
- Bristol Myers’s next big tests are the trial readouts for milvexian and Cobenfy, now expected in 2027.
Merck (MRK) and Bristol Myers Squibb (BMY) both raised their 2026 sales outlooks this summer.
That’s good news for income investors, since a growing business keeps a dividend growing. The two dividends are very different, though. Bristol Myers yields 4.3%. Merck yields 2.4% but raised its payout faster in fiscal 2025.
So which is the better dividend stock?
| Metric | Merck (MRK) | Bristol Myers Squibb (BMY) |
|---|---|---|
| Dividend yield | 2.4% | 4.3% |
| Annual dividend per share | $3.40 | $2.52 |
| Dividend growth, fiscal 2020–2025 | 5.8% a year | 6.2% a year |
| Cash dividend payout ratio, TTM to June 30, 2026 | 52% | 45% |
| Net debt/EBITDA, LTM | 1.6x | 1.74x |
| Interest coverage, LTM | 13.47x | 9.07x |
| Forward P/E, NTM | 16.7x | 9.3x |
Merck: Keytruda still carries the load
Merck’s sales rose 5% to $16.6 billion in the second quarter of 2026, and Keytruda brought in $8.4 billion of that. On Aug. 4, Merck narrowed and raised its 2026 sales range to $66.3 billion to $67.3 billion.
Over the twelve months to June 30, 2026, dividends took a comfortable 52% of Merck’s $16.1 billion of free cash flow. The longer record is lumpier. Dividends paid rose every year from fiscal 2016 to fiscal 2025, while free cash flow swung between $4.56 billion and $18.1 billion and fell short of the dividend in fiscal 2017 and fiscal 2020.
…so its cash dividend payout ratio ranged from 43% to 81% between fiscal 2021 and fiscal 2025.
On the second-quarter call, CFO Caroline Litchfield said, “We remain committed to the dividend with the goal of increasing it over time.” The main risk is concentration: Keytruda makes up just over half of sales.
Bristol Myers: the handoff is working
Where Merck leans on one drug, Bristol Myers is in the middle of a handoff from older drugs to newer ones. Its Growth Portfolio sales rose 15% to $7.6 billion in the second quarter of 2026. That outran a 4% drop in its Legacy Portfolio. On July 30, it raised its 2026 revenue guidance to about $49.0 billion to $50.0 billion.
Over the twelve months to June 30, 2026, dividends took a well-covered 45% of its $11.4 billion of free cash flow. Free cash flow fell short of the dividend only in fiscal 2016, and it has run between $12.0 billion and $15.2 billion a year since fiscal 2020…
…which kept its cash dividend payout ratio between 29% and 39% in every fiscal year from 2021 to 2025.
On the second-quarter call, CFO David Elkins said that alongside deals, Bristol Myers is “continuing to return cash to shareholders through our commitment to the dividend.” The risk is the pace of raises. The dividend rose 2.9% in fiscal 2025, compared with 6.2% a year from fiscal 2020 to fiscal 2025. Bristol Myers also lists its heavy debt among its risks, and its interest coverage is 9.07x, compared with 13.47x at Merck.
So which dividend wins?
Bristol Myers Squibb is the better dividend stock. It pays the bigger check, and it covers that check with more room to spare. Over the twelve months to June 30, 2026, it paid out 45% of its free cash flow, compared with 52% at Merck.
Put $10,000 in each stock today, and Bristol Myers pays $430 a year, compared with $240 from Merck. Merck’s dividend is growing faster right now, but at each company’s fiscal 2025 pace, Merck’s income wouldn’t pass Bristol Myers’s until about 2054. In year 10, that’s about $556 from Bristol Myers and about $376 from Merck.
The market isn’t charging a premium for Bristol Myers, either. It trades at 9.3x forward earnings, right at its five-year average.
This isn’t to say Merck’s dividend isn’t safe. It’s covered, its CFO is committed to raising it, and it carries the lighter debt load. Management also sees a $70 billion commercial opportunity from more than 20 new products by the mid-2030s. It’s just that, when it comes down to it, Bristol Myers pays more today and covers it better, and Merck’s faster raises would take decades to close the gap.
Of course, Bristol Myers’s milvexian and Cobenfy readouts, now expected in 2027, will say a lot about its next leg of growth, so its next dividend raise is the number to watch.
So what is Bristol Myers Squibb stock actually worth?
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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 of the stocks mentioned. Thank you for reading, and happy investing!
