Why Eli Lilly Stock Jumped by 4% Today

The company’s payout is far from the only reason investors like the stock these days, but it certainly helps.

The largest pharmaceutical company in the world by market cap, Eli Lilly (LLY 4.31%), is continuing to share some of its profits with shareholders. The company has kept its quarterly dividend payments flowing, and declared a new distribution on Monday. Investors like getting cash from their companies, and this upcoming payment is generous compared to what it was only a few months ago.

Fresh dividend declared

That morning, Eli Lilly announced that its next quarterly dividend would match its predecessor at $1.30 per share. This is to be paid on June 10 to stockholders of record as of May 16.

Late last year, the pharmaceutical giant enacted a dividend raise, hiking the payout to the present level from $1.13 per share for a 15% increase. The company’s share price has accelerated faster than that, however, so the dividend yield on the enhanced amount is only 0.7%; this is not only below the average of 1.3% for S&P 500 index stocks, but it’s eclipsed by rivals in the pharmaceutical sector.

Yet, in this case, any dividend is frosting on the Eli Lilly cake, and it’s welcomed. The company has been attracting the right kind of attention lately due to Zepbound, which is basically its Mounjaro diabetes treatment repackaged and Food and Drug Administration (FDA)-approved for obesity.

This has vaulted Eli Lilly into a rapidly burgeoning, high-demand sector of the pharmaceutical market. Especially in the U.S., obesity is a problem, and many folks are looking for the relatively easy fix of a weight-loss drug.

A reliable and growing payout

Eli Lilly has never been, and likely won’t ever be, considered a top dividend stock. Still, it is a steady and reliable payer which habitually lifts its payout once per year, so that adds to the attractiveness of the company. If Zepbound takes off as many expect it to, shareholders can look forward to higher dividend raises in the future.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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