Bristol-Myers Squibb Dividend Stock Analysis

Bristol-Myers Squibb Co (NYSE: BMY) discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company is a dividend achiever with an eleven-year track record of annual dividend increases.

Bristol-Myers Squibb Increasing Dividends At The Rate Of 2.80% Per Year

During the past decade, the company has managed to increase dividends at an annualized rate of 2.80%. The last dividend increase was in December 2019, when the company increased its quarterly dividend by 9.75% to 45 cents/share. I believe that future dividend growth will be higher than historical growth, due to the acquisition of Celgene.

BMY

Between 2008 and 2019, Bristol-Myers Squibb has managed to increase Non-GAAP earnings per share from $1.85 to $4.69. I use non-GAAP EPS because it is cleaner, and takes a look at a lot of one-time items or certain GAAP items that make looking at the business more complicated than it should be. Of course, the downside to this line of thinking is that management may decide to place regular and recurring expenses in the “special items” column, but refer to them as one-time.

Either way, the company is expected to grow Non-GAAP earnings per share to $6.25-$6.35/share in 2020 and $7.15-$7.45/share by 2021.

BMY

Earnings per share will grow from finding new drugs, raising prices on existing ones, selling more, strategic acquisitions, and cutting costs.

Celgene Acquisition

In 2019, Bristol-Myers Squibb acquired Celgene for cash and stock. This diversified its drug portfolio and provided an additional margin of safety against patent cliffs.

This deal is accretive to Bristol-Myers due to the fact that the P/E paid for Celgene was lower than the one that Bristol-Myers Squibb stock had; In addition, the part that was financed through debt was accretive, because debt is very cheap today, and is well supported by the company’s strong cash flows. The company is also taking strides to repay it.

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