2 Dividend Stocks to Buy Now for Big Payout Growth Ahead

Core Viewpoint - Income investors should prioritize companies with steadily increasing payout ratios and robust free cash flow over single-period high-yield stocks [1] Group 1: Company Profiles - Merck & Co. (MRK) and Qualcomm (QCOM) are highlighted as large-cap companies with significant dividend growth and moderate payout levels, supported by substantial cash reserves [2] - Merck, founded in 1891, specializes in medicines and vaccines, with notable products like Keytruda and Gardasil, and has a market cap of approximately $235 billion [3] Group 2: Financial Performance - Merck's stock has rebounded by about 29% over the past six months, outperforming the sector's median of 14%, primarily due to strong sales of Keytruda and improving earnings [4] - The forward price-to-earnings ratio for Merck is around 10, significantly lower than the sector median of 19, indicating potential undervaluation [5] Group 3: Dividend Growth - Merck's dividend profile shows a payout ratio of approximately 42% of earnings, with a consistent increase in dividends since 2021, including a recent quarterly dividend increase from $0.81 to $0.85 for Q1 2026 [6] - Over the past five years, Merck's dividends have increased by roughly 38%, reflecting steady income growth supported by healthy cash flow [6]