3 Reasons to Buy Merck for the Long Term

Merck MRK is a blue chip "Big Pharma" stock that is up for the last week, month, quarter, six months, and year of market action. For 2014, Merck has risen by nearly 19 percent. There are three reasons for long term investors to buy shares of Merck in expectation that the share price will increase even more. Merck has a solid pipeline of products and related services. The bullish trajectory of earnings is testament to that. Earnings per share for Merck for the last five years was a negative 16.50 percent. This year,it is even worse at a negative 26.50 percent. But next year, earnings-per-share are expected to jump to 4.55 percent. For the next five years, earnings per share for Merck are expected to be at almost 4 percent. That is a very bullish trend for long term investors. The dividend component of Merck also makes it appealing for long term investors. At present, the dividend yield for a member of the Standard & Poor's 500 Index SPY averages about 1.8 percent. The dividend yield for Merck is 3 percent, more than 50 percent higher. Income investors should also like that Merck is a Dividend Aristocrat. That means the company has increased its dividend yield annually for at least the last 25 years. From that, shareholders get a raise each year just for owning the stock. Demographics favor Merck. The world is getting older and richer. That results in more spending on health care goods and services. From that, Merck will prosper. That is expected by the Wall Street analyst community. Merck is now trading around $57.85. The mean analyst target price for the next year of market action is $60.94. Making the future look even more bullish is that Merck has a tiny short float, evincing that few expert the price to fall.