1 Reason to Buy Bristol Myers Squibb Stock

Key Points

• Bristol Myers Squibb offers a high yield despite raising its dividend payout every year since 2008.

• Bristol Myers Squibb's best-selling product could lose market exclusivity in a few years.

• A lineup of recently launched drugs makes Bristol Myers Squibb an attractive stock to buy now.

• 10 stocks we like better than Bristol Myers Squibb ›

Investors looking for dividend stocks that offer high yields and steady payout growth keep noticing Bristol Myers Squibb (NYSE: BMY). The pharmaceutical giant's dividend payout has been moving in the right direction for 25 years.

Despite the reliable growth, shares of Bristol Myers Squibb offer a 5.5% yield. That's huge when you consider the average dividend-paying stock in the S&P 500 index offers a paltry 1.2% at recent prices.

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Bristol Myers Squibb stock offers a relatively big yield because it recently lost exclusivity for Revlimid, a cancer therapy with sales that peaked at $12.8 billion in 2021. In a few more years, it will also lose exclusivity for Eliquis, an oral blood thinner currently responsible for about 31% of total revenue.

With Revlimid fading fast and Eliquis on the ropes, Bristol Myers Squibb probably seems like a stock to avoid. Despite the headwinds, there's a great reason to buy it right now. Its lineup of recently launched treatments is poised to offset losses from Revlimid and eventually Eliquis.

Bristol Myers Squibb's growth portfolio contains at least seven drugs that grew sales by a double-digit percentage in the second quarter. Second-quarter sales of Breyanzi, a cell-based cancer treatment, more than doubled.

In the quarters ahead, investors can look forward to surging sales of Cobenfy. This new schizophrenia treatment earned approval from the Food and Drug Administration last September, and sales are expected to reach $2.6 billion by 2030.

This year, the big pharma company expects earnings to land in a range between $6.35 and $6.65 per share. That's heaps more than it needs to meet a dividend commitment currently set at an annualized $2.48 per share. With a strong lineup of new products to offset losses due to upcoming patent expirations, its high-yield dividend could keep growing for at least another decade.

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Cory Renauer 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.