Why MERCK & CO. INC. (NYSE:MRK) qualifies as a good dividend investing stock.

MERCK & CO. INC. (NYSE:MRK) was identified as a stock worth exploring by dividend investors by our stock screener. MRK scores well on profitability, solvency and liquidity. At the same time it seems to pay a decent dividend. We'll explore this a bit deeper below.

Analyzing Dividend Metrics

ChartMill assigns a proprietary Dividend Rating to each stock. The score is computed by evaluating various valuation aspects, like the yield, the history, the dividend growth and sustainability. MRK was assigned a score of 7 for dividend:

• MRK's Dividend Yield is rather good when compared to the industry average which is at 4.41. MRK pays more dividend than 93.75% of the companies in the same industry.
• MRK's Dividend Yield is a higher than the S&P500 average which is at 2.39.
• On average, the dividend of MRK grows each year by 6.90%, which is quite nice.
• MRK has paid a dividend for at least 10 years, which is a reliable track record.
• MRK has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.

Understanding MRK's Health

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For MRK, the assigned 7 for health provides valuable insights:

• An Altman-Z score of 4.06 indicates that MRK is not in any danger for bankruptcy at the moment.
• MRK has a Altman-Z score of 4.06. This is in the better half of the industry: MRK outperforms 78.65% of its industry peers.
• The Debt to FCF ratio of MRK is 2.05, which is a good value as it means it would take MRK, 2.05 years of fcf income to pay off all of its debts.
• Looking at the Debt to FCF ratio, with a value of 2.05, MRK belongs to the top of the industry, outperforming 94.27% of the companies in the same industry.
• Even though the debt/equity ratio score it not favorable for MRK, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
• The current and quick ratio evaluation for MRK is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Profitability Assessment of MRK

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. MRK has earned a 8 out of 10:

• MRK has a better Return On Assets (14.62%) than 97.40% of its industry peers.
• MRK has a Return On Equity of 36.96%. This is amongst the best in the industry. MRK outperforms 97.40% of its industry peers.
• MRK's Return On Invested Capital of 19.77% is amongst the best of the industry. MRK outperforms 94.79% of its industry peers.
• With an excellent Profit Margin value of 26.68%, MRK belongs to the best of the industry, outperforming 95.31% of the companies in the same industry.
• The Operating Margin of MRK (34.59%) is better than 95.83% of its industry peers.
• MRK's Operating Margin has improved in the last couple of years.
• MRK's Gross Margin of 78.19% is amongst the best of the industry. MRK outperforms 83.85% of its industry peers.
• In the last couple of years the Gross Margin of MRK has grown nicely.

More Best Dividend stocks can be found in our Best Dividend screener.

For an up to date full fundamental analysis you can check the fundamental report of MRK

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.