It looks like the good times will continue to roll for U.S. pharmaceutical stocks. The recently revealed draft of an executive order aims to lower drug prices by easing industry regulations, without giving the government power to negotiate directly with drugmakers.

As drug pricing fears subside, the future looks awfully bright for Eli Lilly and Co. (NYSE:LLY) and Merck & Co., Inc. (NYSE:MRK), but which of these dividend-paying pharmaceutical stocks is the better pick right now? To find out, let's look at some of the pros and cons facing both industry leaders.

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The case for Eli Lilly and Co.

After years of stagnation, Eli Lilly's top line looks poised for a comeback. First-quarter revenue rose 7% over the same period last year on the backs of two recently launched treatments. Sales of diabetes treatment Trulicity surged 160% to an annualized run rate of $1.5 billion. The company's new psoriasis therapy, Taltz, which launched last March, finished the first quarter on pace to record sales over $400 million.

While Taltz and Trulicity push up sales in the present, a couple of migraine headache candidates in late-stage clinical trials could be the next big things for Lilly. Costs associated with migraine headaches are estimated at about $36 billion annually in the U.S. alone, but a lack of well-tolerated drugs available now leads most patients to suffer untreated.

In the first of two pivotal studies, lasmiditan provided headache relief within two hours for a significantly higher percentage of patients than a placebo. Results from the second pivotal trial are due in the third quarter, and if successful, the company intends to file an application early next year.

For long-term prevention of migraine headaches, galcanezumab also appears to have a shot at the big time. In trials supporting an application Lilly intends to submit before the end of the year, the candidate significantly reduced migraine frequency.

If approved, lasmiditan and galcanezumab could both become blockbuster drugs and offset impending losses from some aging drugs in Lilly's product lineup. Humalog comprised 14% of total sales in the first quarter, and important patents protecting the fast-acting insulin have already expired. In November, major patents protecting Cialis, which comprised about 10% of total sales in the first quarter, will expire as well.

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The case for Merck & Co.

This big pharma is also facing losses to incoming generic competition for some key revenue streams. The first copycat version of Merck's Zetia hit the U.S. market late last year, and first-quarter sales of the cholesterol drug fell 35% over the previous-year period.

Zetia sales comprised about 6% of Merck's total recorded revenue last year. Luckily for Merck, soaring sales of Keytruda should more than offset expected losses. This exciting new cancer therapy makes it harder for tumors to shut down immune system attacks, and it's quickly becoming a popular treatment across a broad range of cancers.

First-quarter Keytruda sales surged 134% higher than the previous-year period to an annualized run rate of about $2.3 billion. In May, the FDA approved Merck's first application to use the immunotherapy in combination with another treatment, and a slew of upcoming submissions could expand its use to enough patients to drive annual sales of the drug beyond $7 billion at its peak.

In the numbers

Both big pharma stocks offer above-average dividend yields compared to those in the benchmark S&P 500 index. Stacked side by side, though, Merck's distribution looks a bit more attractive. Merck's shares offer a 2.85% yield, while Lilly's offer 2.46% at recent prices.

When it comes to their ability to increase quarterly payments in the years ahead, though, the tables turn. To make the last four payments, Merck used about 75% of the free cash flow it generated over the trailing-12-month period. By the same yardstick, Lilly used 61%. That's on the upper edge of the comfort zone, but it does suggest Lilly's dividend could catch up to Merck's over the next several years.

Investors looking for deep value won't find it in either stock. That said, Merck shares are trading at about 17.2 times this year's earnings estimates, a bit less than Lilly's, which trade at a slightly higher multiple of 20.4 times forward earnings.

While these two are about as evenly matched as a pair of pharmaceutical stocks can be, Merck's driving into lighter patent loss headwinds than Lilly. Combined with a slightly more attractive valuation, it looks like the better buy today.

Cory Renauer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.