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Shares of Amgen (AMGN) have broken out of a cup-with-handle base, another reason why income investors should consider the dividend stock.
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The biotech company — headquartered in Thousand Oaks, Calif. — has an assortment of drugs used to treat cancer and autoimmune disorders. Amgen is best known for it its rheumatoid arthritis drug Enbrel, which contributed 17% of sales last year.
Dividend Stock’s Yield At A Hot Rate
Amgen’s dividend yield of 3.2% is solid and over double the 1.5% yield of the S&P 500. Yet what is striking is Amgen’s five-year dividend growth rate of 10.2%. That rate has not slowed, with the company increasing the dividend by 19 cents this year to $2.13 on a quarterly basis.
Amgen should have little issue continuing to raise its dividend if the company hits its targets. After reporting earnings of $17.69 last year, EPS is estimated to hit $17.94 this year before increasing further to $19.13 in 2024, according to IBD MarketSmith.
Company debt is also on solid footing, with debt rated at an investment grade A- from S&P Global.
Amgen Wins Green Light For Horizon Acquisition
Amgen received positive news earlier this month, when the Federal Trade Commission dropped a lawsuit clearing the way for the company to buy Horizon Therapeutics (HZNP) for $28 billion.
The deal will see Amgen add a few new specialized drugs to its portfolio, notably to treat thyroid eye disease and chronic gout.
Nevertheless, it remains to be seen in the longer term if the acquisition was a good move. It will add a significant amount of debt, and the company has already lowered its share buybacks to accommodate the move.
Amgen stock on Wednesday climbed above the 268.24 buy point and remains in buy range to 281.65.
The dividend stock has been outperforming in IBD’s biotech industry group. While the stock ranks 12th, it is particularly impressive considering the group has 775 stocks.
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