Amgen or Merck: Which Drugmaker Has the Stronger Dividend Growth Story?
Both Amgen and Merck write quarterly checks and raise them every year, but only one has the portfolio depth to keep growing that payout through the next brutal round of patent expirations. The answer may surprise investors who have been…
For a retirement portfolio that leans on pharma dividends, the choice between Amgen (NASDAQ:AMGN | AMGN Price Prediction) and Merck (NYSE:MRK) comes down to one question: which check is more likely to keep getting bigger through the next wave of patent expirations? Both companies deliver quarterly income today. Only one has the coverage, the growth cadence, and the portfolio breadth to keep raising through the cliff.
Yield and Raw Income Today
Amgen pays a quarterly dividend of $2.52 per share, an annualized forward payout of $10.08. At $385.28, that lands at a yield of roughly 2.6%. Merck pays $0.85 quarterly, or $3.40 annualized, and at $146.65 yields 2.29%.
On starting yield, Amgen wins. It is not a wide gap, but for a retiree sizing positions to hit an income target, the difference compounds. An investor putting $100,000 to work today gets meaningfully more current cash from AMGN, and the gap holds even after Merck’s 85.17% one-year rally compressed its yield. Winner: Amgen.
Pace and Consistency of Raises
Both boards raise annually, and both raised again this year. The verified quarterly progression tells the story.
Amgen: $2.13 (2023) to $2.25 (2024) to $2.38 (2025) to $2.52 (2026). Management characterized the latest hike as a 6% increase, matching the pace of the prior year’s raise.
Merck: $0.73 (2023) to $0.77 (2024) to $0.81 (2025) to $0.85 (2026). The 2026 hike from $0.81 to $0.85 is a smaller step in dollar terms and in percentage terms than Amgen’s.
Amgen has been pushing 6% raises consistently while Merck’s step-ups have been closer to the mid-single-digit range with a smaller relative bump this cycle. For an income holder who needs the payout to outrun inflation, Amgen’s steeper trajectory matters more than Merck’s slightly larger share count leverage. Winner: Amgen.
Durability Against the Patent Cliff
This is where the matchup is decided. Merck’s Keytruda franchise generated $8.4 billion in Q2 2026 sales, and the CFO warned that “total U.S. Keytruda year-over-year growth will moderate as we increasingly reach peak penetration.” The company’s answer is a $70 billion commercial opportunity across more than 20 new products, with the CEO framing loss of exclusivity as “more of a hill than a cliff.” That is a bet on pipeline execution, and the Q2 quarter absorbed a $5.7 billion charge tied to the Terns acquisition, pushing GAAP earnings to a $0.13 per share loss.
Amgen’s income base is broader by design. In Q2 2026 the company reported $3.5 billion in free cash flow, 22 products with double-digit growth, and 17 products annualizing above $1 billion. Six growth drivers, Repatha, Evenity, Tezspire, rare disease, innovative oncology, and biosimilars, grew 26% collectively and now represent nearly 70% of product sales. Biosimilar erosion is already visible in Prolia and Xgeva, down 33% together, and the dividend kept rising through it.
The balance sheet is the caveat. Amgen carries $57.3 billion in debt at roughly 3.2x EBITDA, higher leverage than Merck’s investment-grade profile. But quarterly free cash flow of $3.5 billion comfortably covers a payout that runs near $1.4 billion per quarter, and management’s raised 2026 EPS guidance to $22.30 to $23.50 keeps coverage climbing. Winner: Amgen.
Verdict
For the retirement-focused income investor, Amgen is the pick. It pays more today, raises faster, and rests on 17 billion-dollar products rather than one $8 billion franchise staring at loss of exclusivity. Merck is a fine capital-appreciation story if the pipeline delivers on the CEO’s “shallow dip” promise, and it belongs in a growth-tilted portfolio betting on the Keytruda successors. But dividend durability is a diversification question, and Amgen already has the diversification Merck is still trying to build.
Contact [email protected] for any questions or corrections.
Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
