Is Amgen Ready for a Dividend?
The big biotechs are growing up, but they're not large pharma--yet.
As a quick screen for dividend-paying drug stocks reveals, biotechs and dividend yields don't often mix. There are several well-known reasons for this divide--biotech's rampant net losses and large growth prospects are chief among them. Some investors, however, might be wondering when the largest biotechs will make the shift. After all, leading biotechs Amgen (AMGN) and Genentech (DNA) have market capitalizations north of some of their large pharma peers. Amgen's net income surpassed the billion-dollar mark way back in 1999, and we're predicting that revenue growth rates could soon dip into the single digits.
However, Amgen and Genentech have no intention of paying a dividend anytime soon; according to their most recent annual filings with the SEC, both companies intend to feed any profits into operations or share repurchase programs (i.e., "buybacks"). In fact, Amgen just approved another $5 billion share repurchase program last month, which shouldn't come as a surprise to longtime investors in this cash-generating firm.
Karen Andersen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.