Is MERCK & CO. INC. (NYSE:MRK) a Good Fit for Dividend Investing?

Our stock screener has spotted MERCK & CO. INC. (NYSE:MRK) as a good dividend stock with solid fundamentals. MRK shows decent health and profitability. At the same time it gives a good and sustainable dividend. We'll dive into each aspect below.

Dividend Analysis for MRK

An integral part of ChartMill's stock analysis is the Dividend Rating, which spans from 0 to 10. This rating evaluates diverse dividend factors, including yield, historical data, growth, and sustainability. MRK has received a 7 out of 10:

• MRK's Dividend Yield is rather good when compared to the industry average which is at 4.11. MRK pays more dividend than 94.95% of the companies in the same industry.
• MRK's Dividend Yield is rather good when compared to the S&P500 average which is at 2.44.
• The dividend of MRK is nicely growing with an annual growth rate of 6.90%!
• MRK has been paying a dividend for at least 10 years, so it has a reliable track record.
• MRK has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.

Understanding MRK's Health Score

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of MRK, the assigned 8 reflects its health status:

• MRK has an Altman-Z score of 3.78. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
• MRK's Altman-Z score of 3.78 is amongst the best of the industry. MRK outperforms 80.30% of its industry peers.
• The Debt to FCF ratio of MRK is 2.05, which is a good value as it means it would take MRK, 2.05 years of fcf income to pay off all of its debts.
• Looking at the Debt to FCF ratio, with a value of 2.05, MRK belongs to the top of the industry, outperforming 93.94% of the companies in the same industry.
• Even though the debt/equity ratio score it not favorable for MRK, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
• The current and quick ratio evaluation for MRK is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Understanding MRK's Profitability

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. MRK scores a 8 out of 10:

• MRK has a better Return On Assets (14.62%) than 96.97% of its industry peers.
• MRK's Return On Equity of 36.96% is amongst the best of the industry. MRK outperforms 96.97% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 19.77%, MRK belongs to the top of the industry, outperforming 94.95% of the companies in the same industry.
• Looking at the Profit Margin, with a value of 26.68%, MRK belongs to the top of the industry, outperforming 95.45% of the companies in the same industry.
• MRK has a Operating Margin of 34.59%. This is amongst the best in the industry. MRK outperforms 95.96% of its industry peers.
• In the last couple of years the Operating Margin of MRK has grown nicely.
• The Gross Margin of MRK (78.19%) is better than 84.34% of its industry peers.
• In the last couple of years the Gross Margin of MRK has grown nicely.

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Check the latest full fundamental report of MRK for a complete fundamental analysis.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.