Merck's Dividend Should be Safe for Now

Merck & Company (MRK) continues on the downside but it's dividend should be safe. If analyst's estimates are correct, Merck will earn $2.38 in 2006 so they should have no trouble paying the current annual dividend of $1.52.

But don't expect Merck to raise its dividend anytime soon. Because of the costs associated with its multi-year restructuring and possible Vioxx liabilities, the dividend will be capped for the foreseeable future. And if the Vioxx law suits go against Merck, they could cut the dividend.

Even with an attractive dividend yield of 5.07% at a $30 stock price, do not buy MRK until the stock turns to the upside.