Wednesday, August 18, 2010

Merck Will Have No Problem Covering Its Dividend


Oddly (or perhaps not so), The Motley Fool is running a headline -- on its current Merck dividend levels story -- that would suggest the opposite of the conclusion the story actually reaches.

Anything to garner eyeballs, I gather -- here is The Fools' bottom line [after the misleading headline]:

How Long Will Merck's Dividend Last?

. . . .However, when we look at Merck's payout ratio compared to its peer average, we see that it is a lower percentage, which illustrates that its dividend is probably more sustainable [than that of its peers]. . . .

Nothing in the recent analyses I've undertaken would suggest that Merck would ever imperil the dividend. It isn't likely to up the payout, either -- but Whitehouse Station, and heir apparent Ken Frazier well knows that a $34-plus handle on the stock will require at least this current level of dividend support. Bank on that.

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