Not a stock split)

With a market capitalization of more than $800 billion, Eli Lilly (NYSE: LLY) is the largest pharmaceutical company in the world. This is largely due to the rise of glucagon-like peptide-1 (GLP-1) agonists such as Mounjaro and Zepbound, which are fueling a new wave of growth for the company.

Over the past 12 months, its shares have risen 58% — nearly double the earnings generated by S&P 500 and Nasdaq Composite. Given the rise in the stock price, some investors may believe that a stock split could be on the horizon. While this is possible, I see it as unlikely. Lilly has not split its stock since October 1997.

Instead, I think the company will increase its dividend. Let’s dig into Lilly’s dividend history and explore why I think a hike could happen before the end of the year.

Eli Lilly Dividend History

On its corporate website, Eli Lilly’s financial records date back to 1972. Back then, Lilly paid a modest quarterly dividend of just $0.01 per share. Today, investors receive quarterly dividend payments of $1.30 (or $5.20 per year) for each share they own.

While it’s nice to see that Lilly has increased its dividend throughout its history, that hasn’t always been the case. Notice in the chart below how between 2009 and 2014 Lilly’s dividend remained constant. However, the company began to increase its dividend consistently starting in 2015, and this is a theme that has remained to this day.

One of the reasons behind the 2015 dividend increase may have been the approval of Lilly’s diabetes drug Trulicity, which received approval from the Food and Drug Administration (FDA) in late 2014.

While GLP-1 drugs such as Zepbound and Mounjaro are currently Lilly’s newest indications, the company’s expanded indication for its cancer drug Verzenio plus recent approval for its Alzheimer’s treatment signal further growth.

For these reasons, I think Lilly is positioned to more than maintain its dividend, but to raise it again.

When does Eli Lilly historically raise its dividends?

Although Lilly began raising its dividend steadily in 2015, investors should be aware of a few details about the schedule of those payments. Every year since then, Lilly has announced an increase in its dividend payout in December, with an ex-dividend date set for mid-February.

The bottom line

While I can’t say with certainty that Lilly will raise its dividend again next December, the historical trends are on my side. If you think Lilly will announce a dividend increase in December, then you may want to get shares before the ex-dividend date (probably sometime in February).

The story continues

Lilly has enormous potential between GLP-1 treatments, treating Alzheimer’s disease and even longer-term bets in artificial intelligence. But the bigger point here is that investing in Lilly is about more than its blockbuster drugs. The company offers investors a unique value proposition in that you are exposed to several cutting-edge areas of healthcare while collecting a dividend.

I see Lilly as a passive income opportunity under control and think now is as good a time as ever to buy the stock, whether a dividend increase happens again in December or not.

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Adam Spatacco has positions in Eli Lilly. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Prediction: This Is What Eli Lilly Stock Will Do Next (Hint: It’s Not a Stock Split) was originally published by The Motley Fool