Should You Buy Bristol Myers Squibb Stock for Its 4.4%-Yielding Dividend?

A big theme for investors in 2026 has been to buy dividend stocks. They can make for valuable investments for not only the recurring income they can generate but also their stability, as they are often fairly safe investments to hang on to. Companies that pay dividends normally have strong financials that enable them to make regular payments -- but that doesn't make them guarantees.

Bristol Myers Squibb (NYSE: BMY) is a top healthcare company that pays a great dividend. It currently yields 4.4%, which is far above the S&P 500 average of 1.2%. At first glance, it may seem like a no-brainer dividend stock. But with patent cliffs looming and big question marks about its future, is that really the case?

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The past doesn't predict the future when it comes to dividends

A big mistake investors can make when looking at dividend stocks is giving too much importance to their track records. As impressive as dividend streaks are, they can be broken, and policies can be changed, especially when a company faces adversity and needs to direct cash to other places.

Bristol Myers faces a tough road ahead as it is facing patent cliffs in the coming years on multiple key drugs, including Eliquis and Opdivo. As generic competition intensifies, its top line could suffer, resulting in lower earnings and less cash flow to fund dividend payments. The company may also be compelled to take on acquisitions to lessen the blow, putting further pressure on its cash.

Last year, the company's revenue was flat at $48.2 billion. This year, it's forecasting a range of $46 billion to $47.5 billion.

Why I'd go elsewhere in search of dividends

Bristol Myers has raised its dividend for 17 consecutive years, its payout ratio is manageable at 72%, and it offers a fairly high yield. Those are all three things that dividend investors love to see from a stock. And yet, Bristol Myers isn't an income investment I'd add to my portfolio today.

There's simply too much uncertainty around the business, and although a dividend cut or suspension may not be inevitable, it's certainly a possibility, depending on how things play out for the company in the next few years. Bristol Myers' business is stable for now, but I don't have enough confidence for it to be a buy-and-forget stock to own. And that's what I think a dividend stock should be -- an investment that you don't have to worry about. Instead of hoping that Bristol Myers performs well and is able to maintain its dividend, I would suggest opting for an index fund that pays dividends instead.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.