Why Amgen and Microsoft Stand Out as Dividend Stocks
Research indicates that dividend-paying stocks have significantly outperformed their non-dividend-paying counterparts over the past few decades. A substantial portion of overall market returns can be attributed to reinvested dividends and compounding. These findings underscore the value of investing in dividend stocks for the long term.
However, not all dividend-paying companies are equally appealing. Which stocks should investors consider? Two compelling options at present are Amgen (NASDAQ: AMGN) and Microsoft (NASDAQ: MSFT). Here’s an examination of why these two stocks merit attention.
1. Amgen
Turning to established pharmaceutical companies like Amgen can be a wise strategy for long-term investing. The company focuses on innovative therapies for serious and life-threatening diseases, ensuring its relevance in the market.
While some drugmakers may falter, Amgen’s robust business model positions it to thrive for years to come. It boasts a diverse portfolio, with over 10 drugs achieving over $1 billion in sales in 2024. In the first quarter, Amgen reported a 9% year-over-year revenue increase, totaling $8.1 billion.
Amgen’s products span various therapeutic areas, including oncology, immunology, rare diseases, and respiratory conditions. Key growth drivers include Tezspire for asthma treatment, Repatha for high cholesterol, and Blincyto for blood cancer.
Like all drug manufacturers, Amgen will eventually face patent challenges that could impact sales. However, the company’s strong pipeline of potential new medicines appears promising. For instance, the weight management candidate MariTide is still in contention despite some setbacks during trial phases. Additionally, Amgen is developing another obesity treatment currently in phase 1 studies.
Beyond weight loss, Amgen has several innovative products, including the recently launched biosimilar, Pavblu, which competes with Regeneron Pharmaceuticals‘ Eylea, a treatment for wet age-related macular degeneration. The company’s robust R&D effort positions it well to weather future patent expirations and maintain steady sales growth.
Amgen’s future looks bright, with a solid track record of regular dividend payments. Over the past decade, the company has increased its dividends by 201%, resulting in a forward yield of 3.4%, compared to the S&P 500 average of 1.3%. While it may lack the flash of tech stocks, Amgen appears to be a solid candidate for buy-and-hold investors.
2. Microsoft
Microsoft’s stock faced challenges earlier this year due to tariff-related concerns and potential economic instability. However, the company’s recent quarterly report largely alleviated those fears. For the third quarter of fiscal year 2025, ending March 31, Microsoft saw revenue rise by 13% year over year, reaching $70.1 billion.
A significant contributor to this growth is Microsoft Azure, the company’s cloud computing division, which recorded a 33% increase in revenue compared to the same quarter last year. Moreover, for the upcoming fourth quarter, Microsoft expects Azure revenue to grow between 34% to 35% in constant currency.
This performance in the face of economic uncertainty highlights Microsoft’s resilience. The company has consistently thrived in difficult times, rewarding long-term shareholders.
Microsoft’s enduring appeal as a long-term investment stems from its strong brand and competitive positioning, particularly in cloud computing and artificial intelligence. Despite its market capitalization exceeding $3 trillion, Microsoft continues to show substantial growth potential.
The company’s dividend outlook remains secure, with a forward yield of 0.8%. Although relatively low compared to other stocks, Microsoft’s ability to generate cash and its history of dividend growth—168% over the past decade—suggest its dividends are reliable. This positions Microsoft as an ideal stock for both growth and income investors.
Should You Invest $1,000 in Amgen Right Now?
Before committing to an investment in Amgen, consider that Motley Fool Stock Advisor recently identified its top ten stock picks, which notably did not include Amgen. The stocks that made the list are anticipated to yield significant returns in the near future.
For example, when Netflix was recommended on December 17, 2004, a $1,000 investment would be worth approximately $623,103 today. Similarly, a $1,000 investment in Nvidia after its recommendation on April 15, 2005, would now stand at about $717,471.
As a reference point, Stock Advisor has reported an impressive average return of 909%, outpacing the S&P 500’s 162%.
Prosper Junior Bakiny does not hold any positions in the stocks mentioned. The Motley Fool has positions in and recommends Amgen, Microsoft, and Regeneron Pharmaceuticals. The Motley Fool recommends options strategies related to Microsoft. A disclosure policy is in place.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
