Merck: This Cancer‑Drug Powerhouse Could Be a Core Dividend Holding for Decades

Core Viewpoint - Merck's shares have increased by 46% over the past year despite facing challenges, indicating resilience in the company's performance and potential for long-term investment [1][2]. Financial Performance - The company experienced weak financial results last year, particularly due to declining revenue from its HPV vaccine franchise, Gardasil and Gardasil 9 [1]. - Merck's market capitalization stands at $303 billion, with a current stock price of $121.99 and a gross margin of 81.5% [8]. Key Products and Competition - Keytruda, Merck's leading cancer drug, is the best-selling in the world but will lose patent exclusivity by 2028, facing potential competition from new entrants like Summit Therapeutics' ivonescimab [4][6]. - Despite anticipated competition, Keytruda is expected to maintain a strong market presence due to its wide range of approved indications and proven efficacy [6]. Product Development and Pipeline - Merck has diversified its product lineup with successful approvals such as Winrevair for pulmonary arterial hypertension and Capvaxive, a pneumonia vaccine, both contributing to solid sales [8][9]. - The company is expanding its pipeline with promising candidates, including a revolutionary influenza vaccine, demonstrating its commitment to innovation and overcoming competitive pressures [9]. Dividend and Investment Outlook - Merck's dividend has increased by 93.8% over the past decade, with a payout ratio of 45.1%, indicating strong potential for future dividend increases [10]. - The stock offers a forward yield of 2.8%, significantly higher than the S&P 500 average of 1.2%, making it an attractive option for income-seeking investors [10].