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amgen (AMGN -1.86%) is one of the world’s largest pharmaceutical manufacturers, with a market capitalization of more than $150 billion. The company pays a dividend, has grown steadily over the years, and has many growth opportunities and blockbuster products in its portfolio. It includes all the important elements that make it a solid investment. But has it been a good buy in the past decade? Let’s take a closer look at the stock’s return and whether you should consider investing in Amgen today.
Where was Amgen stock 10 years ago?
On its first day of trading in 2014, Amgen stock closed at $115.80. If he had invested $20,000 in the business at the time, he would have acquired approximately 173 shares of stock in the company, assuming he bought around that price.
Since then, Amgen stock has been on a fairly steady rise, closing at $294.43 on Monday. At that time, those 173 shares would be worth approximately $50,936. His initial $20,000 investment would have increased his investment by 155%.
But that’s not all. Amgen is also a dividend stock, meaning investors will see the company’s regular quarterly payments inflate its already strong earnings. If you had reinvested the dividends, your Amgen investment would actually be worth about $67,910 today.
Now, compare this to what would happen if you invested in a broad range of areas. S&P500 index. His $20,000 investment in the S&P 500 at the time would be worth him $65,670 including dividends, so the actual result would be quite similar.
Amgen has been a great stock to own and an investment that outperformed the market over the past decade. Although it didn’t significantly outperform the S&P 500, it delivered superior returns to investors.
Amgen’s focus on growth has paid off for investors
Over the past decade, Amgen has become a larger and more diversified company. In 2014, his product sales exceeded $19.3 billion. Last year, that total amounted to $26.9 billion, an increase of 39% over the past decade. In 2014, the company developed seven major blockbuster drugs that occupied the top line. Currently that number is 9, but that number may increase in the future.
Amgen has not hesitated to invest in acquisitions that it believes will grow its business. In October, it entered into a $27.8 billion deal to acquire Horizon Therapeutics. With the acquisition, Amgen acquired Tepezza, a promising treatment for thyroid eye disease, along with Cristexa, a gout treatment. But it’s Tepezza that takes home the prize. Because at its peak annual sales he could be $3.9 billion.
In 2022, Amgen acquired Chemocentrics for $3.7 billion. The acquisition creates Tabneos, a treatment for anti-neutrophil cytoplasmic autoantibody-associated vasculitis, which also has the potential to be a blockbuster.
The company’s financial situation looks strong
Amgen’s business is in very good financial shape. It generated $7.4 billion in free cash flow last year, and sales rose 7% to $28.2 billion. Although Amgen is not a very rapidly expanding company, it does have the resources (i.e. cash) at its disposal to continue pursuing growth opportunities in the future.
The dividend payout ratio is also 68%, so the dividend is safe. His above-average dividend yield of 3.1% gives investors plenty of incentive to keep buying the stock. The company has also increased its dividend for 12 consecutive years.
Is Amgen stock a good buy?
There’s a lot to like about Amgen. We generate significant cash and profits to support the long-term growth opportunities necessary to remain a market-beating stock. Dividends make trading more attractive to investors and are a good source of recurring income.
Medical professionals also look cheap, trading at just 15 times expected future earnings. Amgen stock can definitely be added to any portfolio.
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