We recently published a list of 15 Best NASDAQ Dividend Stocks To Buy. In this article, we are going to take a look at where Amgen Inc. (NASDAQ:AMGN) stands against other best NASDAQ dividend stocks to buy.
The NASDAQ, heavily comprised of technology stocks, has been on a consistent upward trajectory for some years. In 2023, it experienced remarkable growth, marking its best performance since 2020 with an increase of over 43%. In 2024, the index continued to surpass market expectations with a 28.64% gain. This impressive performance is largely driven by the excitement surrounding artificial intelligence, which has significantly boosted major tech stocks and the broader market throughout 2023 and into this year. Analysts suggest that the NASDAQ could be the index of the future, as its companies have shown a strong ability to adapt to evolving market trends.
NASDAQ’s consistent outperformance can be observed over several years. According to a report by Invesco, since January 1, 2008, the Nasdaq-100 Index has delivered a cumulative total return of 750%, significantly outpacing the broader market’s 315% return. This success is largely attributed to the innovation driven by tech companies, which continues to attract investors. For instance, the technology sector in the broader market has achieved an annualized total return of 20.65% over the past decade, compared to 12.80% for the market. This leadership is understandable given the rapid adoption of technology in recent years. The Industry Classification Benchmark (ICB) noted that the Nasdaq-100 has approximately 55% exposure to the tech sector, in contrast to about 32% for the broader market.
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Tech companies are not only driving innovation but are also swiftly adjusting their dividend strategies. In 2024, many prominent tech firms began issuing dividends, significantly boosting the overall dividend pool. Although dividends are traditionally linked with value stocks rather than the high-growth companies fueling the AI surge, analysts suggest this shift broadens the appeal of these stocks to new investor groups while putting surplus cash to use. Typically, growth-focused companies prioritize reinvestment over returning earnings to shareholders. However, experts like Ted Mortonson from Baird argue that these dividend payments won’t undermine the companies’ future dominance. Here are some other comments from the analyst:
“I don’t view it as a problem. I view it as they’ve won. They’ve won the technology side. They’ve won on the business-model side, and they’re going to win on the Gen AI cycle.”
Overall dividends are becoming increasingly popular among investors, with many US companies either raising or maintaining their payouts. Howard Silverblatt, a Senior Index Analyst at S&P Dow Jones Indices, suggested that with an anticipated reduction in interest rates by the FOMC in 2025, coupled with record earnings forecasted for the fourth quarter of 2024 and the entire year of 2025, companies might allocate more funds towards substantial dividend hikes in the upcoming year. He further mentioned that February, traditionally the peak month for dividend increases, is expected to see even more significant growth as some firms may look to compensate for previous conservative strategies. In 2024, the large-cap companies in the broader market outperformed many others, achieving record levels in earnings, sales, and dividends. For 2025, a projected 8% rise in dividend payments is expected, up from a 6.4% increase in 2024.
Our Methodology
For this list, we scanned Insider Monkey’s database of 900 hedge funds as of the third quarter of 2024 and selected companies that are trading on the NASDAQ exchange and also pay dividends to shareholders. From that list, we picked 15 stocks with the highest number of hedge fund investors and ranked in ascending order of hedge funds’ sentiment toward them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A pharmacist filling a prescription for a complex drug developed by the company.
Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 68
Amgen Inc. (NASDAQ:AMGN) is an American multinational biopharmaceutical company. Its MariTide has the potential to become a notable weight loss drug, and the company is also developing at least one other obesity treatment. These initiatives mark the early stages of Amgen’s expansion into the rapidly growing obesity market. Beyond weight loss, the company’s pipeline remains promising, particularly in the biosimilar sector. Recently, the company secured a legal victory, clearing the way to release a biosimilar of Regeneron’s Eylea, used to treat wet age-related macular degeneration, even as the two companies continue their patent dispute in court.
In the third quarter of 2024, Amgen Inc. (NASDAQ:AMGN) reported $8.5 billion in revenue, reflecting a 23.1% increase compared to the same quarter the previous year. The company experienced double-digit sales growth across ten products, including $1.2 billion from its rare disease treatments, driven by several innovative, early-stage medications. Amgen generated $3.3 billion in free cash flow during the quarter, up from $2.5 billion in Q3 2023. This growth was primarily due to strong business performance and favorable timing of working capital items, although it was somewhat offset by reduced interest income.
Amgen Inc. (NASDAQ:AMGN) currently pays a quarterly dividend of $2.38 per share, having raised it by 5.8% in December 2024. Through this increase, the company stretched its dividend growth streak to 13 years, which makes AMGN one of the best dividend stocks on our list. The stock’s dividend yield came in at 3.53%, as of January 15.
According to Insider Monkey’s database of Q3 2024, 68 hedge funds held stakes in Amgen Inc. (NASDAQ:AMGN), compared with 69 in the previous quarter. These stakes have a total value of more than $1.7 billion. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q3.
Overall, AMGN ranks 9th on our list of best NASDAQ dividend stocks to buy. While we acknowledge the potential for AMGN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMGN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
