History shows that Eli Lilly tends to do something special with its stock toward the end of the year.
With a market capitalization of over $800 billion, Eli Lilly (LLY 0.70%) is the largest pharmaceutical company in the world. Much that is thanks to the rise of glucagon-like peptide-1 (GLP-1) agonists such as Mounjaro and Zepbound, which are fueling a new wave of growth for the company.
Over the past 12 months, its shares have soared 58% — nearly double the gains generated from the S&P 500 and Nasdaq Composite. Given its soaring share price, some investors might think a stock split could be on the horizon. While this is possible, I see it as unlikely. Lilly hasn’t split its stock since October 1997.
Instead, I think the company is going to raise its dividend. Let’s dig into Lilly’s dividend history, and explore why I think a raise could come before year-end.
Eli Lilly’s dividend history
On its corporate website, Eli Lilly’s financial records date back to 1972. Back then, Lilly paid a modest quarterly dividend of just $0.01 per share. Today, investors receive quarterly dividend payments of $1.30 (or $5.20 per year) for each share they own.
While it’s nice to see that Lilly has raised its dividend throughout its history, that hasn’t always been the case. Note in the graph below how between 2009 and 2014 Lilly’s dividend stayed flat. However, the company began to steadily raise its dividend starting in 2015, and this is a theme that has remained to today.
LLY Dividend data by YCharts
One of the reasons behind the dividend hike in 2015 could have been the approval of Lilly’s diabetes medication Trulicity, which got the nod from the Food and Drug Administration (FDA) in late 2014.
While GLP-1 medicines such as Zepbound and Mounjaro are currently Lilly’s newest bellwethers, the company’s expanded indication for its cancer drug, Verzenio, plus its recent approval for its Alzheimer’s treatment signal further growth ahead.
For these reasons, I think Lilly is positioned for more than just maintaining its dividend, but raising it again.
When does Elil Lilly historically raise its dividend?
Although Lilly started consistently raising its dividend in 2015, investors should be aware of some details around the schedule of these payments. Every year since then, Lilly announced a hike to its dividend payment in December with an ex-dividend date slotted for mid-February.
Image source: Getty Images.
The bottom line
While I can’t say for certain that Lilly will raise its dividend again this upcoming December, historical trends are on my side. If you do think Lilly is going to announce a dividend hike in December, then you may want to scoop up shares before the ex-dividend date (likely to be sometime in February).
Lilly has enormous potential between GLP-1 treatments, treating Alzheimer’s disease, and even longer-term bets in artificial intelligence. But the bigger idea here is that there is more to investing in Lilly than just its blockbuster drugs. The company offers investors a unique value proposition in that you’re exposed to several cutting-edge areas in the healthcare realm, while also collecting a dividend.
I see Lilly as an under-the-radar passive income opportunity and think now is as good a time as ever to buy shares, whether a dividend hike occurs again in December or not.