Among healthcare stocks, Bristol Myers Squibb (BMY 0.62%) has built a solid track record of dividend growth. The pharmaceutical company has increased its quarterly dividends during each of the past 18 years.

The company faces patent expirations for Eliquis and other flagship drugs, raising concerns that it can maintain (let alone grow) the dividend. Resolving the company's "patent cliff" remains a work in progress, but there is one important number that offers reassurances about this blue chip dividend stock's growth prospects.

Image source: Getty Images.

The $3.5 billion silver bullet

Right off the bat, it's clear that Bristol Myers Squibb, patent cliff or not, will continue generating the cash flow to sustain its $0.63-per-share quarterly dividend (around $2.52 per share annually). For instance, analyst estimates call for earnings of around $6.31 per share this year. Based on these estimates, the stock has a forward payout ratio of around 40%. That's well below what most consider sustainable levels (around 60% or lower).

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NYSE: BMY

Bristol Myers Squibb

Today's Change

(-0.62%) $-0.36

Current Price

$57.58

Key Data Points

Market Cap

$118BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$56.94 - $57.94

52wk Range

$42.52 - $62.89

Volume

11.2M

Avg Vol

11.5M

Gross Margin

66.07%

Dividend Yield

4.36%

A big reason why Bristol Myers Squibb can keep generating enough earnings to cover and grow its dividend is its cost-cutting plans, first announced two years ago. At the time, the company's management said it planned to cut $1.5 billion in annual expenses by 2026.

Management made progress executing this plan in 2025, dubbing its cost-cutting program a "strategic productivity initiative." Even better, the company announced plans to reduce annual expenses by an additional $2 billion by 2027. That's $3.5 billion in total anticipated cost savings.

The $10.5 billion backstop

While $3.5 billion may be the most important number for future dividend growth, another figure could help bolster payouts: Bristol Myers Squibb currently sits on around $10.5 billion in cash and cash equivalents.

With this liquidity serving as a backdrop, Bristol Myers Squibb's dividend (currently paying a 4.5% forward yield) looks safe for now, with room to grow. As uncertainty still weighs on shares, any "better than expected" news about the patent cliff could drive a rally.