Why Dividend Investors Should Double Down on Bristol Myers Squibb and Amgen Now

In an era marked by market volatility and shifting pharmaceutical landscapes, dividend investors are increasingly seeking resilient portfolios that balance income generation with long-term growth. Two names that stand out in this context are Bristol Myers Squibb (BMY) and Amgen (AMGN). Both companies are navigating patent cliffs-inevitable revenue declines due to generic competition-but are leveraging innovation, strategic acquisitions, and disciplined financial management to sustain dividends and unlock value. For investors prioritizing stability and forward-looking growth, these firms represent compelling opportunities.

Bristol Myers Squibb: Reinventing the Portfolio Amid Patent Expirations

BMY's third-quarter 2023 results underscored the challenges of a patent cliff. Revenue dipped 2% year-over-year to $11.0 billion, largely due to generic erosion of Revlimid, a blockbuster drug that once accounted for a significant portion of its sales. However, the company's proactive strategy to offset these losses is gaining traction. By acquiring Mirati Therapeutics and Karuna Therapeutics in 2024, BMY has bolstered its oncology and neuroscience pipelines, positioning itself to capitalize on high-growth therapeutic areas.

A critical pillar of BMY's resilience lies in its bispecific immunotherapy collaboration with BioNTech. While the $2 billion upfront and anniversary payments through 2028 pose short-term costs, the partnership aims to deliver next-generation cancer treatments that could redefine market dynamics. Analysts note that BMY's 2025 earnings are projected between $6.35 and $6.65 per share-well above its $2.48 annualized dividend-ensuring dividend sustainability even as legacy products face generic competition. With a forward dividend yield of 5.64% and 16 consecutive years of dividend increases, BMY offers a rare combination of income security and innovation-driven growth.

Amgen: Diversification and Biosimilars as Strategic Anchors

Amgen's 2023 performance highlights its ability to adapt to patent expirations through diversification. Q3 2023 revenues rose 4% to $6.9 billion, driven by robust sales of Repatha (up 31% YoY) and record-breaking results from EVENITY and TEZSPIRE. The company's rare disease segment, strengthened by the acquisition of Horizon Therapeutics, has become a key revenue driver, offering higher margins and less competitive pressure.

Amgen's biosimilar strategy further insulates its financial model. By expanding its biosimilar portfolio, the company not only mitigates losses from core products like Prolia but also taps into a growing market for cost-effective therapies. This dual approach-innovating in high-margin segments while leveraging biosimilars-has enabled Amgen to maintain a strong balance sheet, generating $2.5 billion in free cash flow during Q3 2023.

Dividend sustainability remains a cornerstone of Amgen's value proposition. The company's 2025 fourth-quarter dividend of $2.38 per share reflects its 12th consecutive year of dividend growth. While the long-term impact of patent expirations remains uncertain, Amgen's disciplined capital allocation and focus on lifecycle extensions position it to sustain payouts even in a post-patent cliff environment.

A Volatile Market's Best Bets

Both BMY and AMGN exemplify how pharmaceutical firms can transform patent cliffs into opportunities. BMY's aggressive pipeline investments and Amgen's strategic diversification demonstrate a shared commitment to innovation-driven resilience. For dividend investors, these companies offer not only attractive yields but also the financial fortitude to weather industry headwinds.

In a market where uncertainty reigns, doubling down on firms with proven adaptability and robust cash flows is prudent. BMY and AMGN's ability to navigate patent cliffs while maintaining-and even growing-dividends makes them standout choices for investors seeking both income and long-term value.