AMGN vs MRK: Dividend Comparison
Dividend data as of
Amgen Inc (AMGN) and Merck & Co., Inc. (MRK) are both in the Health Care sector, making them natural rivals for dividend investors. Both stocks offer similar yields — AMGN at 2.61% and MRK at 2.77%. For dividend growth, AMGN leads with a 5-year CAGR of 15.9% versus MRK's 5.9%. MRK holds the edge in dividend safety with a "Safe" rating. Both are classified as Dividend Contenders.
Verdict
Yield Analysis
MRK yields 0.15% more than AMGN. In dollar terms, AMGN pays $9.52/share vs MRK's $3.24/share annually.
Dividend Growth
AMGN: Dividend growth is slowing — the 3-year CAGR of 5.7% trails the 5-year rate of 15.9% and the 10-year rate of 13.7%.
MRK: Dividend growth is slowing — the 3-year CAGR of 5.3% trails the 5-year rate of 5.9% and the 10-year rate of 7.1%.
Dividend Safety
AMGN: The payout ratio of 67% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.5x.
MRK: The payout ratio of 45% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.2x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in AMGN vs MRK today?
At $369.70 per share, $10,000 buys about 27.0 shares of Amgen Inc (AMGN). Each share pays $9.52 per year in dividends, so the position starts out generating roughly $258 per year — about $21 a month.
At $121.49 per share, $10,000 buys about 82.3 shares of Merck & Co., Inc. (MRK). Each share pays $3.24 per year in dividends, so the position starts out generating roughly $267 per year — about $22 a month.
On day one the two positions generate nearly identical income; the difference comes from what happens to each dividend afterward.
What could $10,000 of AMGN or MRK income look like in 10 years?
Amgen Inc (AMGN) has raised its dividend about 15.9% a year over the past five years. If that pace held, the $261 per year that $10,000 generates today at the current 2.61% yield would reach $1,140 per year by 2036 — a 11.4% yield on the original cost.
Merck & Co., Inc. (MRK) has raised its dividend about 5.9% a year over the past five years. If that pace held, the $277 per year that $10,000 generates today at the current 2.77% yield would reach $490 per year by 2036 — a 4.9% yield on the original cost.
On those trailing rates, AMGN pays more in 2036: $1,140 versus $490 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would AMGN's dividend growth overtake MRK's higher yield?
Amgen Inc (AMGN) yields less today (2.61% vs 2.77%) but has grown its dividend faster — 15.9% vs 5.9% a year over the past five years. If both trends continued, a $10,000 position in AMGN would start out-earning the same position in MRK around 2027 (roughly 1 year from now), paying about $303 per year at the crossover. Before that point, MRK pays more each year; after it, the gap compounds in AMGN's favor.
Can AMGN and MRK afford their dividends?
Amgen Inc (AMGN) earns $14.24 per share against $9.52 paid out in dividends — 1.5x coverage (a 67% payout ratio).
Merck & Co., Inc. (MRK) earns $7.28 per share against $3.24 paid out in dividends — 2.2x coverage (a 45% payout ratio).
MRK's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for AMGN if earnings weaken.
Which fits an early-retirement income portfolio better, AMGN or MRK?
For income you need right now, Merck & Co., Inc. (MRK) leads: $100,000 invested today pays about $230 a month at the current 2.77% yield, versus $218 a month from Amgen Inc (AMGN) at 2.61%.
With a decade or more before the income is needed, AMGN's faster dividend growth (15.9% vs 5.9% a year) matters more than the starting yield — raises compound into the larger paycheck over time.
On consistency: AMGN has raised its dividend 14 consecutive years; MRK has raised its dividend 15 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $1,475/yr in AMGN vs $643/yr in MRK by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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