We recently published a list of 12 Best Consistent Dividend Stocks to Buy. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against other best consistent dividend stocks to buy.
Over the past two years, persistently high inflation has led to increased borrowing costs, creating a difficult landscape for both businesses and consumers. Adding to this challenge is the uncertainty surrounding potential interest rate cuts by central banks, regulatory shifts under the new US administration, and ongoing geopolitical instability—all of which have contributed to a slowdown in economic activity. Against this backdrop, competition for capital has intensified, prompting companies to refine their business strategies with both short-term and long-term objectives in mind as they seek to secure essential resources amid economic uncertainty.
According to a report by S&P Global, in 2024, global dividend growth surged by 8.5%, marking a significant acceleration. This increase was particularly notable in the Asia-Pacific region, where government policies encouraged a shift from annual to semiannual dividend distributions. Meanwhile, the U.S. market experienced a surge in dividend initiations and reinstatements, driven largely by the technology, media, and telecommunications (TMT) sector.
Investors have shown a growing preference for dividend stocks, particularly in the wake of recent market turbulence, which saw a sharp sell-off that also affected AI-related equities. The Dividend Aristocrat Index has surged by nearly 1.5% since the start of 2025, compared with a 3.4% decline of the broader market, as of the close of March 21. Analysts remain positive about the outlook for dividend stocks this year. The S&P Global report highlighted that with interest rates likely to stay high at least through the first half of 2025, dividends and a well-balanced capital return strategy will continue to play a crucial role. Companies are expected to focus on these factors as they work to maintain investor confidence and draw in new shareholders.
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Within dividend investing, stocks with a strong history of dividend growth, backed by stable cash flows, remain a preferred choice among investors. A report by J.P. Morgan suggested that global equities are on the verge of a significant phase of dividend expansion, driven not only by a cyclical increase in payouts but also by a structural shift toward sustained dividend momentum. Over the past two decades, global dividends per share have increased at an average annual rate of 5.6%. However, JPM’s analysts now anticipate this growth rate to accelerate to 7.6% in the coming years.
A key factor behind this expected acceleration is the historically low starting point for payout ratios, which measure dividends as a proportion of earnings. In 2020, during the COVID-19 pandemic, an unprecedented number of companies reduced their dividend payments, leading to a 12% decline in global dividends—an even sharper drop than that experienced during the Global Financial Crisis. Given the uncertainty at the time, this reaction was widely viewed as a prudent decision.
Since then, equity markets have staged a strong recovery, fueled by surging global earnings, particularly in sectors such as Big Tech and, more recently, artificial intelligence. However, as dividend policies are typically guided by cautious corporate boards and management teams, dividend payouts have lagged behind earnings growth during these boom periods. As a result, payout ratios have now fallen to their lowest levels in 25 years, suggesting that companies are distributing a smaller share of their earnings compared to historical norms. Simply reverting to more typical payout levels could contribute an additional 2% annual dividend growth over the next five years, according to J.P. Morgan. This trend is already underway, with global dividend growth outpacing earnings growth in seven of the last eight quarters. Given this, we will take a look at some of the best dividend stocks with consistent histories.
Our Methodology
To compile this list, we thoroughly reviewed reputable sources such as Forbes, Morningstar, Barron’s, and Business Insider. From their latest articles, we gathered the stocks they collectively favored. These companies demonstrate robust cash flow, maintain healthy balance sheets, and have a track record of steady dividend payments. In addition, we assessed the hedge fund sentiment for each stock using Insider Monkey’s Q4 2024 database. The stocks are arranged in ascending order based on the number of hedge funds that hold stakes in these companies.
At Insider Monkey, we are obsessed with hedge funds. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a person’s hand holding a bottle of pharmaceuticals.
Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 91
Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based multinational pharmaceutical company. In the fourth quarter of 2024, the company delivered strong financial results, with revenue rising 7% year-over-year to $15.6 billion. The company has expanded its footprint in specialty pharmaceuticals and oncology, with Keytruda playing a pivotal role in its cancer treatment portfolio and serving as a key driver of revenue growth. Its solid market position has allowed Merck to maintain a steady cash flow, reinforcing its commitment to returning value to shareholders.
For the full year, Keytruda sales surged 18% from the prior year, reaching $29.5 billion. The drug is projected to generate over $35 billion in revenue by 2028 before its patent expires, further solidifying Merck’s dominance in the immunotherapy market.
Merck & Co., Inc. (NYSE:MRK) currently pays a quarterly dividend of $0.81 per share, offering a dividend yield of 3.48%, as of March 22. With 14 consecutive years of dividend growth, it remains one of the best dividend stocks on the list.
Merck & Co., Inc. (NYSE:MRK) continues to make significant investments in research and development, focusing on cardiovascular and rare diseases to drive long-term growth. In addition, the healthcare sector’s resilience during economic downturns makes Merck an attractive investment, as demand for essential medications remains stable regardless of broader market conditions.
Overall, MRK ranks 2nd on our list of best consistent dividend stocks to buy. While we acknowledge the potential of MRK as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than MRK but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
