Throughout the year, financial markets have had the jitters surrounding elevated inflation, rising interest rates, and softening parts of the economy. That's why the S&P 500 index is still down 10% year-to-date, despite the rally over the last several weeks.

But plenty of stocks that are viewed as more defensive and income-oriented have trounced the S&P 500 index thus far in 2022. Pharma stock Bristol Myers Squibb (BMY -0.11%) -- Up 20% year-to-date -- is one such example. Yet the shares appear to still be an appealing buy for income investors. Here's why.

1. A steady performer

With more than 32,000 employees throughout 45 countries, Bristol Myers is one of the largest pharmaceutical companies in the world. The company's drug portfolio is diversified across numerous therapy areas like oncology, immunology, and cardiology. 

When Bristol Myers shared its financial results for the second quarter ended June 30 in late July, its revenue and non-GAAP (adjusted) diluted earnings per share (EPS) were better than expected.

The company reported $11.9 billion in total revenue in the second quarter, which was 1.6% higher year-over-year. This surpassed the average analyst revenue estimate of $11.5 billion during the quarter. How did Bristol Myers meet or exceed the analyst revenue consensus for the eighth quarter out of the last 10 quarters?

The company's existing product portfolio, called in-line products, produced $8.7 billion in revenue for the quarter. This was up by 8.6% over the year-ago period. The growth was led by high-single-digit and low-double-digit revenue growth, respectively, from Eliquis, a blood thinner co-owned with Pfizer (PFE -0.41%), and the cancer drug Opdivo.

Bristol-Myers' new product portfolio, featuring the anemia drug Reblozyl, posted $482 million in revenue in the quarter -- more than double the year-ago period. These revenue gains were more than enough to offset the revenue decline from the company's loss-of-exclusivity (LOE) products, headlined by the cancer drug Revlimid. LOE products generated $2.7 billion in revenue during the quarter, which was down 21.6% year-over-year.

Bristol Myers' adjusted diluted EPS surged 18.4% higher over the year-ago period to $1.93 in the second quarter. This comfortably outpaced the average analyst forecast of $1.79. And it marked the ninth quarter out of the past 10 that Bristol Myers has accomplished this feat.

Aside from the increased total revenue base, the company's non-GAAP net margin soared 360 basis points higher year-over-year to 34.9% in the second quarter. A 4.6% decline in the weighted-average diluted share count to 2.1 billion also propelled Bristol Myers' adjusted diluted EPS higher. This explains how the company's adjusted diluted EPS growth was far higher than its revenue growth.

Pharmacists work during the COVID-19 pandemic.

Image source: Getty Images.

As more competition is allowed against Revlimid, the impact of the patent expiration will become greater over time. But with a pipeline of more than 50 compounds currently under development, Bristol Myers is expected by analysts to achieve annualized EPS growth of 4.9% over the next five years.

2. The market-topping dividend is safe

Bristol Myers' 2.9% dividend yield is significantly higher than the S&P 500 index's 1.5% dividend yield. And investors can sleep easy at night knowing that the dividend is secure.

It's projected that the stock's dividend payout ratio will be just 29% in 2022. This should provide Bristol Myers with the capital needed to fund acquisitions, complete share repurchases, and pay down debt. Mid-single-digit annual earnings growth is likely to be the case for the medium term. Given this and the sustainable payout ratio, I would be surprised with annual dividend growth less than high-single digits over the next few years.

3. Market-beating returns can persist

As well as Bristol Myers' stock has done this year, it looks to have room to run even higher. That's because the stock is trading at a dirt cheap forward price-to-earnings (P/E) ratio of 9.9. This is much lower than the pharmaceutical industry average forward P/E ratio of 13.5.

To command a premium valuation, Bristol Myers would arguably have to prove that it can overcome patent expirations on Eliquis and Opdivo in the second half of this decade. But if its pipeline and ability to do bolt-on acquisitions are any indication, the market could reward the stock with a valuation multiple closer to its peers.