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Here's Why Bristol Myers Squibb Stock Is Heating Up Today

By George Budwell – Dec 13, 2021 at 10:28AM

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A revamped shareholder rewards program has investors piling into this beaten-down pharma stock today.

What happened

Shares of the pharma giant Bristol Myers Squibb (BMY 0.03%) are up by a healthy 4.77% as of 2:26 p.m. ET Monday. The drugmaker's shares are responding positively to a noteworthy dividend increase and a sizable bump in its share repurchase program announced earlier today. 

Specifically, Bristol's board of directors announced a 10.2% increase in the company's quarterly dividend to $0.54 per share today. On an annualized basis, the pharma titan's yield now stands at an attractive 3.66%. In the same announcement, Bristol also said that it is boosting its share repurchase program by $15 billion. These share repurchases will reportedly take place over a multiyear period at management's discretion.    

A notepad with the word dividends next to a roll of U.S. currency and a calculator.

Image source: Getty Images.

So what

Bristol's stock was trading close to a 52-week low prior to this news. Wall Street lost interest in this pharma stock due to patent issues, a key regulatory delay for the heart drug mavacamten, a lack of movement on the merger and acquisition front, slowing growth for its flagship cancer medicine Opdivo, and its underwhelming involvement in the massive COVID-19 product space.

Bristol's stock, though, was arguably being punished far too severely by this unforgiving market. The drugmaker's shares, in fact, were trading at under 8 times forward-looking earnings at their low point this year, which is one of the cheapest valuations across the entire galaxy of commercial-stage biopharmaceutical stocks. 

Now what

Is Bristol's stock still worth buying after today's uptick? The answer is most definitely yes. Bristol now pays out an above-average dividend yield, it has stellar free cash flows, and it is close to bringing several new products to market. This boost to its shareholder rewards program should thus prove to be an inflection point in terms of the drugmaker's share price performance. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.

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