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Comparing Amgen’s and Merck’s Dividends and Tax Rates

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Dividend projections

Amgen (AMGN) and Merck (MRK) reported dividends per share of $5.28 and $1.99, respectively, in fiscal 2018. In its fourth-quarter conference call, Amgen guided for its dividend per share rising 10% YoY (year-over-year) to $1.45 in the first quarter of fiscal 2019. In fiscal 2018, the company raised its quarterly dividend per share by 15% YoY to $1.32, returning $3.5 billion in dividends to shareholders.

Analysts expect Amgen’s annual dividend per share to be $5.50, $5.92, and $6.02 in fiscal 2019, fiscal 2020, and fiscal 2021, respectively, implying YoY changes of 4.20%, 7.56%, and 1.69%. Amgen returned $21 billion to shareholders as dividends and share repurchases in fiscal 2018.

Analysts expect Merck’s annual dividend per share to be $2.22, $2.25, and $2.28 in fiscal 2019, fiscal 2020, and fiscal 2021, respectively, implying YoY changes of 11.46%, 1.49%, and 1.14%. Amgen’s dividends are expected to be higher and increase faster than Merck’s.

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Comparing tax rates

In its fourth-quarter earnings conference call, Amgen guided for a non-GAAP tax rate of 14%–15% in fiscal 2019, assuming an effective tax rate of 21% on the company’s US profits and a much lower effective tax rate of 10.5% on international profits due to recent tax reform. Analysts expect Amgen’s effective tax rate to be 13.98%, 13.98%, and 14.03% in fiscal 2019, fiscal 2020, and fiscal 2021, respectively.

In its fourth-quarter conference call, Merck reported that it expects a tax rate of 18.5%–19.5% in fiscal 2019. Analysts expect Merck’s effective tax rate to be 19.08%, 18.68%, and 18.90% in fiscal 2019, fiscal 2020, and fiscal 2021, respectively—higher than Amgen’s. Next, we’ll discuss Amgen’s and Merck’s capex and interest expenses in fiscal 2019.

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