Many people are staying away from their doctor or dentist, out of caution, during the COVID-19 pandemic. But most pet owners are still bringing Fido, Kitty, and Mr. Whiskers to the vet, and even if they're not, they're going online to make sure they have their pet's meds.

Pet health is a growth industry, with 67% of U.S. families owning a pet (85 million homes), up from 56% in 1988. In the U.S., people spent $95.7 billion on pets last year, and that includes spending on pet health. PetMed Express, Phibro Animal Health, and, yes, Merck & Co. are growing pet medicine companies with solid dividends. Here's why I like each one, even amidst a pandemic. 

Puppy and kitten sleeping together.

Image source: Getty Images.

Pandemic shutdowns are helping PetMed Express

PetMed Express (NASDAQ:PETS) is coming off a strong fourth quarter, with net sales of $74.3 million, an increase of 15% over the same quarter last year, and net income of $7 million, compared to $6.6 million the same quarter in 2019. The company said it added 107,000 new customers in the quarter, which ended March 31, with an average order of $90. Those numbers are likely to climb in the first quarter for the Florida-based online pet pharmacy.

The company also increased its quarterly dividend from $0.27 to $0.28. The company's yield of 3.01% is enticing. My only concern about the dividend is that its payout ratio of 73.04% trailing 12 months (TTM) is a little high and reliant on continued growth.

Phibro Animal Health still feeding strong sales

Phibro Animal Health (NASDAQ:PAHC) manufactures animal health and nutrition products, including vaccines for cattle, swine, poultry, and fish. While most of the company's products are used or livestock, some of it goes to companion animals, or pets.

Unlike PetMed, Phibro has said it is facing demand and supply disruptions because of COVID-19. It also has been hurt by reduced demand because of the effects of the African swine fever currently hitting Asia. Still, the news in the company's third-quarter report wasn't a disaster. Net sales were $211 million, an increase of 2% over the same quarter in 2019. Net income, however, was $14 million, a 9% drop, and earnings per share fell four cents to $0.33. 

The company kept its quarterly dividend to $0.12 a share, giving it a yield of 1.91%. It's a sustainable yield as the company's payout ratio is 31.37% (TTM). 

The Teaneck, N.J., company has five years of continued sales growth, and once coronavirus concerns pass, it expects to get back to that.

"We believe the current difficult situation will begin to normalize in the second half of the calendar year and the industry gradually will return to typical operating levels," said Phibro Chief Financial Officer Richard Johnson on the company's third-quarter earnings call.

Merck is a huge player in veterinary medicine

Yes, Merck and Co. (NYSE:MRK) manufactures all sorts of pharmaceutical products, but its animal health division is part of its core business. The Kenilworth, N.J., pharma giant spent $400 million earlier this month to buy the U.S. rights to Sentinel's brand of parasiticides for pets.

While the company said it expects negative effects on its overall business because of the COVID-19 pandemic, those headwinds weren't pressing in the first quarter. The company's overall revenue was $12.1 billion, up 11% over the same quarter year-over-year, and its net income of $3.2 billion for the quarter represented a 10% rise over the same quarter. Its animal health division had sales of $1.2 billion for the first quarter, an increase of 21% compared with the same quarter in 2019.  

The company raised its quarterly dividend by 10.9% in November, to $0.61 per share, or $2.44 annualized. The yield on the dividend is 3.09%, with an easily sustainable payout ratio of 47.01%.

There are reasons to like all three

PetMed Express and Merck both provide plenty of growth with great dividends, but both are priced relatively high, near the top of their 52-week highs. However, looking at their earnings per share and price-to-earnings ratio, both may still be better buys than Phibro. Continued headwinds might eventually bring down Phibro's share price, providing a better opportunity to get in on a solid dividend stock that will rebound.