Like many big pharma businesses, Bristol Myers Squibb (BMY 0.17%) is a relatively stable player dividend investors might be interested in due to its combination of safety and modest growth. While it isn't going to win any awards for ratcheting up its payout or being sold at a dirt-cheap valuation, it probably won't crash overnight or find itself tangled in a web of controversy either.

So is this stock a good choice for your portfolio, or would something with a bit more spunk be a better option? Let's evaluate.

The price is right, and its dividend is safe

Bristol Myers is one of the world's largest drug companies. It makes medicines to treat everything from solid tumors and melanomas to anemia. It has more than 40 programs in its pipeline, six of which are currently in the registration phase awaiting the green light from regulators before their possible launch sometime in 2023 or 2024. In the first quarter alone, it chalked three new approvals, with one each in its oncology, immunology, and hematological medicines segments.

With a pace of new launches like that, it's no wonder management expects to add $25 billion in new drug revenue by 2030 to its 2022 top line of $46.1 billion. According to management, most of that new revenue will start to land after 2025. But don't take that to mean this stock is unaffordable to buy for passive income.

For its valuation, Bristol's price-to-earnings (P/E) multiple is 23, putting it near the market's average P/E of 22 and roughly half that of its high-flying competitors in pharma, like Novo Nordisk. So it isn't exactly a bargain buy, but there's not much risk of having a heady valuation collapse under pressure. Nor is there much to suggest there will be a better deal for its shares waiting in the wings if investors hold off on buying now.

Regarding its dividend, its forward yield is 3.3%, which is neither low nor high. Likewise, its dividend rose by only 62% over the last 10 years, climbing by an average of 4.8% annually, which won't win any awards. But with a payout ratio of 74%, it could probably continue to return capital to shareholders. And continuing to hike its payout around its current pace isn't going to break the bank anytime soon either.

Keep your expectations grounded

This kind of fairly priced stock could be a long-term opportunity for someone seeking passive income without too much risk exposure. However, it's also important to recognize that its valuation indicates that the market does not anticipate rapid growth anytime soon. Its most recent earnings update substantiates that perspective.

While it brought in $11.3 billion in Q1, a drop of 3% year over year, Bristol also won't be growing its top line by much more than 2% this year, per management. Newly marketed generic medicines are devouring the market share of its myeloma drug Revlimid. And Wall Street analysts aren't predicting much top- or bottom-line expansion in 2024, either.

In short, don't buy this stock expecting it to beat the market while delivering a decent dividend income because it probably can't do both with its resources. Furthermore, keep in mind that it doesn't necessarily have many growth opportunities over the next year or so due to the timing of the expected completion of its late-stage pipeline programs.

On the other hand, if you're comfortable with low growth in exchange for the stability of its dividend, Bristol Myers isn't a bad pick. Though you can probably find companies that are better deals, faster-growing, or with a higher dividend yield, this one will be around for the foreseeable future, returning capital to its investors all the while, which isn't half bad.