Bristol-Myers Squibb: Strong Earnings Could Warrant Higher Dividend Growth Ahead

The past year has been difficult for pharmaceutical giant Bristol-Myers Squibb (BMY). The stock has lost 20% of its value over the past one year.

Fortunately, the company gave investors some good news, with a strong first-quarter earnings report.

Bristol-Myers has increased its dividend each year since 2009. With two more annual increases, the company will join the list of Dividend Achievers.

The Dividend Achievers are a group of 265 stocks with 10+ years of consecutive dividend increases.

Bristol-Myers’ dividend increases have been modest—the company has raised its quarterly dividend by just one penny per share, going back to 2009.

The company has withheld raising its dividend by higher amounts, so that it could invest more aggressively in its drug pipeline.

The good news is that the investments are starting to pay off.

This article will discuss Bristol-Myers’ better-than-expected first quarter earnings report, and its growth prospects moving forward.

Quarterly Report Overview

A quick rundown of Bristol-Myers’ first-quarter results are as follows:

Both figures beat analyst expectations, which called for $4.78 billion of revenue, along with adjusted earnings-per-share of $0.72.

The bottom line was particularly surprising. Analysts had expected earnings-per-share to decline from the same quarter last year.

Instead, Bristol-Myers posted a double-digit increase. As a result, it is not surprising that the stock jumped 4% after reporting earnings.

Bristol-Myers is a global company. Slightly less than half of its revenue is derived from outside the U.S.

Source: 2016 Annual Report, page 4

In 2015 and 2016, most of Bristol-Myers’ growth came from the U.S.

For example, U.S. revenue increased 31% in 2016 Annual Report, to $10.72 billion. This resulted in overall company-wide revenue growth of 17% last year.