Pharmaceutical giant Merck & Co. (MRK 0.07%) spun off its women's health and biosimilars divisions, along with its portfolio of older drugs, into a separate company, Organon, last year so it could focus on its oncology therapies and vaccines. The move has paid off handsomely both for Merck and investors.

Merck's stock is up more than 17% this year, while the Dow Jones Industrial Average has fallen more than 20% in that same period. On top of that, Merck delivers an above-average dividend, having raised it 6% this year to $0.69 per quarter. That's the 12th consecutive year it has increased its payout.

So are Merck shares still a good deal for investors? Let's take a look.

On track for a record year

Merck delivered a company-record $48.9 billion in revenue last year and is on track to smash that mark. Midway through the year, the company reported revenue of $30.5 billion, up 38% over the first six months of 2021, while net income totaled $8.3 billion, up from $3.9 billion. The company's earnings per share came in at $3.25, up 75%, year over year.

The driving force for that growth is oncology blockbuster Keytruda, which had $10 billion of sales in the first six months, up 24.5% year over year. The company also saw strong results for antiviral Lagevrio, which reported $4.4 billion in sales in its first full year. Meanwhile, Human Papillomavirus (HPV) vaccine Gardasil, saw sales of $3.1 billion, up 45.6% over the prior-year period.

The biggest long-term concern

Keytruda is approved now for 33 different uses across 13 different types of cancer. The drug was responsible for 36% of the company's revenue in the first six months of this year. That may become a problem in a few years as Keytruda is facing a potential patent cliff as early as 2028.

There's a good chance, though, that many of the drug's patents won't be easy to knock down as Merck has 129 patents associated with the drug. Many of those patents were filed after 2014 when the biologic drug received its first Food and Drug Administration (FDA) approval to treat melanoma. The most recent of the patents will extend the drug's patent wall to 2036, giving Merck plenty of time to replace its revenue with other drugs.

In the meantime, the company has the drug in an incredible 1,600 trials to treat various types of cancer. It works by increasing the ability of the body's immune system to detect and fight tumor cells. In one of those trials, Merck is working with Moderna to utilize Keytruda with Moderna's messenger RNA delivery system as a personalized cancer vaccine to treat patients with high-risk melanoma. The treatment is in a phase 2 clinical trial conducted by Moderna.

MRK Chart

Data source: YCharts

A huge pipeline is a good sign

Merck has 113 molecules in its late-stage pipeline, including 30 in phase 3 clinical trials. This past summer, the FDA expanded the indication for Vaxneuvance, the company's pneumococcal vaccine, to treat infants and children. The vaccine was already approved for adults.

On Oct. 10, Merck reported strong results from a phase 3 trial for Sotatercept to help treat a blood disorder known as pulmonary arterial hypertension (PAH). In the study, patients treated with the therapy saw a significant increase in the distance they could walk in six minutes by the 24-week follow-up.

The results means that Merck's $11 billion purchase of Acceleron Pharma last year may soon pay off, as the drug was developed by Acceleron. Sotatercept, if approved, will boost an already strong PAH portfolio for Merck, which includes Adempas and MK-5475, which is in a phase 2/3 trial for PAH.

Another promising medication is Lynparza, which prevents the PARP protein from repairing DNA in tumor cells. Approved to treat ovarian, prostate, and breast cancer, Lynparza brought in $541 million in the first half of the year, up 96% year over year. The drug was also just approved in China as a first-line maintenance combination therapy with bevacizumab, sold by AstraZeneca to treat ovarian, fallopian tube or primary peritoneal cancer.

Merck is also seeing improved sales from chickenpox vaccine Varivax, which produced $1 billion in revenue through six months, up 8% year over year. The company's expanded revenue and pipeline should continue to drive the company's results for years to come -- even as it adjusts to Keytruda's patent cliff.

Meanwhile, the stock offers an attractive dividend yield of 3.07% compared to 1.82% for the S&P 500. Merck has grown its dividend by 60% over the past decade, but with a dividend-payout ratio standing at just 47%, there's plenty of room for growth ahead.