One of the more frustrating stocks I have owned for a long time is Bristol-Myers Squibb (BMY). Indeed, Bristol-Myers is an original member of the Editor’s Portfolio when my newsletter was first published nearly 30 years ago, recalls Chuck Carlson, dividend reinvestment specialist and editor of DRIP Investor.
At that time, the stock was selling for $70 per share. To be sure, the stock has not been stuck around $70 per share for nearly three decades — on a split-adjusted basis, the stock was trading for around $17 per share back in August 1992. So, I have made money on the stock.
Still, these shares have been fairly sluggish for an extended period of time, as the current per-share price is still below the stock’s peak in 2016 of around $76 per share. The good news is that Bristol-Myers stock is closing in on that level, having recently moved to a new 52-week high.
Now, I have learned not to get too excited when Bristol-Myers has what appears to be a nice breakout. The stock has had trouble sustaining upward moves. However, perhaps this time will be different.
The stock certainly trades at an attractive valuation — only 9 times its 2022 earnings estimate of $7.80. And per-share earnings are expected to increase each year through 2025. Furthermore, the dividend yield of 3% enhances total-return potential.
So, yes, it is possible you could see buyers come into the stock in the near term. Meanwhile, potential negatives include more aggressive price regulation in the pharmaceutical industry; a return to a high-risk, high-beta market, which would make Bristol-Myers shares less attractive; and a spreading out of the downside damage to this market.
If I didn’t own the stock, would I be a buyer of these shares? Well, I have consistently reinvested dividends in the stock for the nearly 30 years I have owned it, and I think that is the best way to accumulate shares in Bristol-Myers Squibb.
I would be reluctant to chase the stock now with a big investment. The stock historically has provided many opportunities to buy at more favorable prices, and I suspect there will be a better opportunity to be more aggressive on the buy side.
Please note Bristol-Myers Squibb offers a direct-purchase plan whereby any investor may buy the first share and every share directly from the company. Minimum initial in-vestment is $250. Subsequent in-vestments are a minimum $50. There is an enrollment fee of $15.
Reinvestment fees are 5% of the amount reinvested (maximum $3) plus $0.06 per share. Purchase fees are $5 ($2 for shares purchased with automatic investment) plus $0.06 per share. Selling fees are $15 plus $0.12 per share. The plan administrator is Equiniti. For enrollment information call (855) 598-5485 or visit shareowneronline.com.
