AMGN vs. MRK: Which Pharma Giant’s Dividend Actually Has Room to Grow
Amgen and Merck both yield around 2.3% and have surged this year, but one of them is paying its dividend out of thin air while the other has a cash cushion that changes the entire income calculus.
Should an investor saving for retirement put their next dollar of income capital into Amgen (NASDAQ:AMGN | AMGN Price Prediction) or Merck (NYSE:MRK)? The two yields are near identical. Amgen’s annualized forward dividend of $10.08 on a $437.04 share price works out to about 2.31%. Merck pays $3.40 on a $149.91 stock, a yield of about 2.27%. Each stock has rallied hard this year, Amgen up 36.25% year to date and Merck up 45.38%, so the choice comes down to what sits beneath each check.
Dividend Safety: Amgen Has the Cushion Income Investors Need
Amgen guides 2026 non-GAAP EPS of $22.30 to $23.50. At the $22.90 midpoint, the forward dividend uses roughly 44% of earnings. Second-quarter free cash flow reached $3.489 billion, up 82.57%, and cash rose to $13.989 billion. The blemish is $57.3 billion of debt, but cash generation covers the payout well.
Merck’s 2026 non-GAAP EPS guidance is $2.66 to $2.76, depressed by one-time charges of $3.62 per share for Cidara and $2.31 per share for Terns. Against the $2.71 midpoint, the dividend represents about 125% of this year’s guided earnings. On 2025 EPS of $8.98, coverage looked far better at about 38%. Chief Financial Officer Caroline Litchfield said on the Q2 call, “We remain committed to the dividend with the goal of increasing it over time.” She also said “Business development remains a high priority,” which means more deal charges could land. Winner: Amgen.
Dividend Growth: Amgen Raises Faster Every Year
Amgen lifted its quarterly payout from $2.38 to $2.52, a 6% increase. Since the $1.76 rate of 2021, the dividend has grown about 43%, and the record stretches back to $0.28 in 2011.
Merck moved from $0.81 to $0.85, roughly 4.9%. From the $0.65 rate of 2021, its payout is up about 31%. Merck’s steps are reliable but smaller, a sign that acquisitions get first call on its capital. Winner: Amgen.
What Backs the Payout: Amgen’s Growth Is Already in the Numbers
Amgen’s six key growth drivers rose 26% and made up about 70% of Q2 product sales. Repatha grew 37% and IMDELLTRA 115%, more than making up for Prolia’s 32% biosimilar decline. Management raised 2026 revenue guidance to $38.2 billion to $39.4 billion. Amgen fell nearly 10% on a September trial setback, and the MariTide obesity program still rides on 10 Phase 3 studies.
Merck’s Keytruda family brought in $8.37 billion in Q2, but core Keytruda growth was -1%. Chief Executive Rob Davis calls the coming exclusivity loss “more of a hill than a cliff” and points to “greater than $70 billion of commercial opportunity” from more than 20 new products. WINREVAIR rose 75%, yet full-year revenue guidance implies just 2% to 4% growth. Amgen is already showing the replacement growth Merck is still promising. Winner: Amgen.
Verdict: Amgen Screens Stronger on Income Metrics Now
Amgen takes all three rounds. It pays a slightly higher yield, covers that payout with less than half of guided earnings, raises faster, and has growth products large enough to offset its patent losses today. It also trades at about 17 times forward earnings, which leaves room for the income story to compound.
If this kind of dividend-vs-dividend screen is how you build an income portfolio, we ran the same exercise across the longest-tenured payers in the market and ranked ten of them by valuation in a free Dividend Kings guide.
Merck’s case rests on a pipeline re-rating, and its dividend exceeds this year’s guided earnings. For income investors focused on coverage and growth, Amgen’s payout screens stronger on these metrics. Keep an eye on Merck’s late-year dividend declaration (the last two raises were declared in November) and on Amgen’s December declaration, which delivered its last increase on 2025-12-09.
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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.
