GLP-1 drugs are all the rage on Wall Street today, with demand for these weight loss products expected to be strong for years to come. It helps in super charging Eli Lillyof the (NYSE: LLY ) Growth and its stock price. However, you may be better off with this high-yield drug, although it does not compete in the GLP-1 market.
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Eli Lilly was second in the market with GLP-1 drugs, but Monjaro and Zipband proved to be more effective than competing products. They are now the leading GLP-1 drugs, with 2025 revenue growth of 99% and 175%, respectively. Together, they account for 56% of Eli Lilly’s top line. Eli Lilly owes much to the success of these two drugs.
Wall Street does not focus on this risk; This has boosted Eli Lilly’s stock price. The price-to-earnings (P/E) ratio is 44, and the dividend yield is a stingy 0.6%. It seems that Eli Lilly has a price for perfection. If you have a value bias or prefer more income, you may want to look elsewhere.
Merk (NYSE: MRK ) Does not compete with Eli Lilly in the GLP-1 space. Merck focuses on the treatment of cancer, infections, and cardiometabolic diseases. These areas may not be as exciting as weight loss right now, but they are very important treatment categories. And while Merck faces some patent expirations, it also has a strong pipeline of new drugs.
Meanwhile, the end of a major patent for Keytruda in the US market may not be as bad as it seems. Merck has a global patent for the drug that extends into the early 2030s. It also has a new delivery method for Keytruda that could extend patent protection into the late 2030s.
That said, the main reason to choose Merck over Eli Lilly is the mix of value and yield. Merck’s P/E ratio is a very reasonable 16, and its yield is a dramatic 2.8%. Merck also has a long history of supporting its dividend, which has not increased every year but has risen steadily for three decades. And with a payout ratio of around 50%, there seems to be little risk that a shortfall will occur at this stage.
Nothing wrong with Eli Lilly, either. It is doing very well as a business now. However, Wall Street has maintained a very high valuation on the stock. If you’re looking for a dividend-paying pharmaceutical giant, Merck will probably be more to your liking.
