Beat the Nasdaq With This Cash-Gushing Dividend Stock

Reliable dividend income from high-quality companies is a great option for investors seeking to ride out stock market turbulence. Biotech giant Amgen (NASDAQ: AMGN) exemplifies this strategy with its 3.3% dividend yield, supported by steady growth and rock-solid fundamentals. Compared to an 8% decline in the Nasdaq Composite index year to date, Amgen stock has outperformed, up 9% thus far in 2025.

Let's explore why this cash-generating healthcare leader is well-positioned to continue beating the Nasdaq.

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Multiple growth drivers

The biopharmaceutical industry is one of the most vital sectors in the economy, developing groundbreaking medicines that can be life-changing for patients fighting serious diseases. Amgen stands out with a highly diversified portfolio of over 40 therapeutics across four key areas -- General Medicine, Rare Disease, Inflammation, and Oncology. Notably, 14 of its products have achieved blockbuster status, generating over $1 billion in annualized sales with best-in-class profiles.

In 2024, Amgen delivered strong results, with full-year revenue reaching $33.4 billion. That's a 19% year-over-year increase, or 7% growth excluding the effect of the 2023 Horizon Therapeutics acquisition. The company had 21 products achieve record sales, with 10 posting double-digit revenue growth. Key products gaining traction include Blincyto, a revolutionary blood cancer treatment for B-cell acute lymphoblastic leukemia, and Evenity, a best-in-class osteoporosis treatment. Several early stage rare-disease products also contributed to sales momentum.

Amgen's 2024 earnings per share (EPS) rose to $19.84 from $18.65 in 2023, while free cash flow surged 41% to $10.4 billion, reflecting the company's robust business performance. Looking ahead to 2025, Amgen expects continued positive earnings growth, driven in part by several clinical pipeline programs nearing regulatory submission, providing a promising outlook for the company.

Image source: Getty Images.

Amgen is moving into the weight-loss segment

One of Amgen's most promising therapeutic candidates is MariTide, a novel weight-loss and obesity treatment currently initiating a phase 3 study.

Compared to existing glucagon-like peptide-1 (GLP-1) medications approved by the U.S. Food and Drug Administration (FDA) from biotech giants like Novo Nordisk and Eli Lilly, MariTide stands out as a unique dual agonist targeting both GLP-1 and glucose-dependent insulinotropic polypeptide (GIP) receptors. Early data suggests that Amgen's approach may offer several advantages, including the potential for faster weight loss with longer-lasting results and less frequent dosing.

The addressable market for diabetes and obesity indications is estimated at $53 billion and projected to nearly triple to $139 billion by 2030. If further readouts confirm MariTide's best-in-class efficacy potential, it could be a game-changer for Amgen, enabling a disruptive entry into the rapidly growing GLP-1 market and further bolstering the company's strengths.

Dividend growth at an attractive valuation

Amgen's outlook bodes well for shareholders, particularly given the company's attractive $2.38 per share quarterly dividend, which yields 3.3%. With an annual dividend payout ratio below 50% based on the midpoint of its 2025 EPS guidance, Amgen appears to have ample financial flexibility to continue its streak of 13 consecutive years of dividend increases.

Given that the current dividend yield exceeds the stock's 10-year average yield of around 2.7%, one interpretation is that Amgen is undervalued, with potential for the stock price to rise and the dividend yield to normalize lower. This view is echoed by the stock's forward price-to-earnings (P/E) ratio of 13.6, which represents a discount to the broader market.

Considering Amgen's strong earnings profile and multiple growth drivers, a compelling case can be made that its long-term outlook remains robust, making shares a bargain at current levels.

AMGN Dividend Yield data by YCharts.

The big picture for investors

This year is poised to be a pivotal one for Amgen, with pending data from several high-profile programs having the potential to move the stock. Even if its share price doesn't surge immediately, investors are getting paid to wait with the company's generous dividend. A combination of significant long-term growth potential and attractive value makes the stock a worthy addition to diversified portfolios that could help investors get a leg up on the market into 2026 and beyond.

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Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.