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Eli Lilly Raises Dividend by 15%

By Eric Volkman - Dec 14, 2020 at 7:18PM

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The company's new payout will be dispensed in March.

One of the biggest and most durable pharmaceutical companies on the market is increasing its shareholder payout. Eli Lilly ( LLY -0.49% ) announced Monday that it is upping its quarterly dividend by 15%; it will pay its first $0.85 per-share distribution next March 10 to investors of record as of Feb. 12.

At the company's most recent closing stock price, the new amount would yield just under 2.2%.

In percentage terms, the latest hike matches that of its predecessors. In December, 2019, for example, Eli Lilly declared that its dividend would rise from nearly $0.65 per share to $0.74; previous raises were at or close to that 15% mark.

Medical professional displaying a dollar sign paperweight.

Image source: Getty Images.

Since the end of 2014, the company has habitually increased its payout near the conclusion of every year. Over that stretch of time, the amount has increased from $0.49 to the present level.

As a well-established and typically profitable big pharmaceutical company with a sizable portfolio of drugs, Eli Lilly throws off significant cash on a regular basis. It also has a robust pipeline, the most recent news from which indicated that tirzepatide, a diabetes treatment, performed well in a late-stage clinical trial.

In Eli Lilly's most recently reported quarter, free cash flow (FCF) exceeded $1.4 billion, more than twice what it ended up paying out in shareholder disbursements. As its business is likely to continue to grow, investors can probably look forward to more dividend hikes.

Despite the news of the latest dividend raise, Eli Lilly stock slipped by 1.3% in trading on Monday, a steeper fall than that suffered by the S&P 500 index on the day.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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