Does Eli Lilly & Co. (LLY)’s Dividend Have Room to Soar?

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Future growth
Up to this point, we’ve looked at Eli Lilly & Co. (NYSE:LLY)’s dividend in the past, and we’ve also seen how its stock is being perceived by the market today. However, the most important factor to consider when understanding a dividend’s future is where the company’s cash flow is heading. It’s hard to generate more cash without growing sales, so let’s take a look at what industry analysts are expecting for Eli Lilly’s revenue growth relative to peers this year.
Foolish bottom line
Like many of its peers, Eli Lilly & Co. (NYSE:LLY) has faced, and continues to face, significant patent cliff headwinds. Cymbalta and Humalog accounted for one-third of 2012 sales, and both drugs lose patent protection this year. That presents a big challenge to cash flow and payout ratio. The company seems to like its $1.96 annual payout (it’s been at that level for four years and counting), and while I don’t think it’ at risk of dropping, I also think these challenges decrease the chances that it will grow in the near term.

The article Does Eli Lilly’s Dividend Have Room to Soar? originally appeared on and is written by Brenton Flynn.

Brenton Flynn has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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