Motley Fool: Fat dividend and a chance for growth

Bristol Myers Squibb’s (NYSE: BMY) financial results haven’t been great lately. Its third-quarter revenue of $12.2 billion was an increase of only 3% year over year. To make matters worse, over the next few years, patent protections will expire for several of the company’s drugs.

However, Bristol Myers Squibb recently earned approval for a new subcutaneous formulation of its melanoma drug Opdivo, which will help mitigate losses. It has also worked hard to develop and launch new products in recent years, some of which are making a material impact on its financial results. Newer products like cancer drugs Opdualag and Breyanzi, and heart medication Camzyos, are each on pace to generate close to or more than $1 billion in sales this year.

Further drug approvals are likely. One promising candidate is Pumitamig, a cancer drug being developed with BioNTech. Additionally, Bristol Myers Squibb has a robust pipeline with plenty of active programs, and its outlook for the next decade remains strong.

Meanwhile, the stock recently traded at a forward-looking price-toearnings (P/E) ratio of 9, well below the average of 19 for the health care sector. Long-term dividend investors might take a closer look at the company. (The Motley Fool owns shares of and recommends Bristol Myers Squibb.)

My smartest investment

My smartest investment was purchasing 32 shares of Microsoft for $3,023 in 1992. It was my first stock purchase, and I still have those shares today. After five 2-for-1 stock splits, my 32 shares have become 1,024 shares – recently valued at around $485 per share. Today’s value, then, is close to $500,000! Buying and holding onto a good company is a good idea. I’ve purchased additional shares of Microsoft over the years, and it has continued to be a good decision. – D.P., via email

The Fool Responds: You got into a great company early! Microsoft’s initial public offering (IPO), its entrance onto the stock market, happened in 1986, just six years before you invested in it. Buying and hanging on to shares of growing companies is a powerful path to wealth. Your example is a great example of the power of compounded growth: At recent levels, a mere 10% increase in Microsoft’s value would boost your wealth by nearly $50,000 – and your original investment was only about $3,000.

It’s also smart to add money to winning stocks. We do hope your portfolio is diversified, with holdings in multiple stocks and not too much money riding on any one company.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@ fool.com.)

Ask the fool

Q. Always hear about “the Dow” – but what is it? – G.F., Portsmouth, New Hampshire

A. “The Dow” is short for the Dow Jones Industrial Average. It’s often used as a proxy for the entire U.S. stock market, but it’s an index of only 30 companies. It began in 1896 with just 12 companies, including General Electric, U.S. Leather, American Tobacco, American Cotton Oil, National Lead and Laclede Gas. None of these companies still exist in their original forms, though some merged with or were acquired by other businesses, or split up to form new ones.

Over the years, many companies have been added to or removed from the index. In 2024, for example, Nvidia was added, ousting Intel.

The current 30 Dow companies are 3M, Amazon.com, American Express, Amgen, Apple, Boeing, Caterpillar, Chevron, Cisco Systems, Coca-Cola, Goldman Sachs Group, Home Depot, Honeywell International, International Business Machines (IBM), Johnson & Johnson, JPMorgan Chase, McDonald’s, Merck, Microsoft, Nike, Nvidia, Procter & Gamble, Salesforce, Sherwin-Williams, Travelers Companies, UnitedHealth Group, Verizon Communications, Visa, Walmart and Walt Disney.

Some suggest that the S&P 500 index of 500 of America’s biggest companies is a better proxy for the U.S. stock market. The Dow has also been criticized for being “price-weighted,” with its value based on its components’ stock prices rather than, say, their market values. For example, Goldman Sachs, with a recent share price of $911 and market value of $276 billion, wields more than 10 times the influence of Cisco Systems, with its recent share price of $78 and market value of $308 billion.

Q. What’s an “uptick”? – S.D., Ann Arbor, Michigan

A. It’s when the latest price for a stock or security is higher than its price the previous time it traded.