1 Dividend Stock to Buy Hand Over Fist and 1 to Avoid

By Reuben Gregg Brewer – Mar 8, 2026 at 1:30PM ESTKey PointsWall Street is enamored of pharmaceutical giant Eli Lilly and its GLP-1 products right now.This pharma peer has a a more modest P/E, more attractive yield, and a solid payout ratio.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. That's helped to supercharge Eli Lilly's (LLY +0.70%) growth and its stock price. However, you might be better off with this higher-yielding drug peer, even though it doesn't compete in the GLP-1 market. Image source: Getty Images. Too much of a good thing Eli Lilly was second to market with a GLP-1 drug, but Mounjaro and Zepbound 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 has a lot riding on the success of these two drugs. Wall Street isn't focusing on that risk; it has pushed Eli Lilly's stock price sharply higher. The price-to-earnings (P/E) ratio is 44, and the dividend yield is a miserly 0.6%. It looks like Eli Lilly is priced for perfection. If you have a value bias or prefer more income, you'll probably want to look elsewhere. ExpandNYSE: LLYEli LillyToday's Change(0.70%) $6.92Current Price$990.18Key Data PointsMarket Cap$934BDay's Range$966.67 - $991.2152wk Range$623.78 - $1133.95Volume132KAvg Vol3.2MGross Margin83.04%Dividend Yield0.63% Merck operates in different places Merck (MRK 0.17%) doesn't compete with Eli Lilly in the GLP-1 space. Merck is focused on treating cancer, infections, and cardiometabolic disease. These areas may not be as exciting as weight loss right now, but they are very important therapeutic categories. And while Merck has some patent expirations coming up, it also has a strong pipeline of new drugs. Meanwhile, the big patent expiration for Keytruda in the U.S. market may not be as bad as it seems. Merck has international patents for the drug that extend into the early 2030s. It also has a new Keytruda delivery method that could extend patent protection into the late 2030s. ExpandNYSE: MRKMerckToday's Change(-0.17%) $-0.20Current Price$115.87Key Data PointsMarket Cap$286BDay's Range$113.82 - $116.3652wk Range$73.31 - $125.14Volume352KAvg Vol13MGross Margin74.21%Dividend Yield2.83% That said, the real reason to prefer Merck over Eli Lilly is a mixture of valuation and yield. Merck's P/E ratio is a far more reasonable 16, and its yield is a dramatically higher 2.8%. Merck also has a long history of supporting its dividend, which hasn't been increased every year but has moved steadily higher for over three decades. And with a payout ratio of roughly 50%, there seems to be little risk that a cut would take place at this juncture. Eli Lilly isn't bad, just expensive There's nothing wrong with Eli Lilly, per se. It is doing very well as a business right now. However, Wall Street has placed a very rich valuation on the stock. If you are looking for a dividend-paying pharmaceutical giant, Merck will probably be more to your liking.Read NextMar 7, 2026 •By Reuben Gregg BrewerWhere Will Eli Lilly Stock Be in 10 Years?Mar 3, 2026 •By Prosper Junior Bakiny2 Top Growth Stocks to Buy in the First Half of 2026Mar 3, 2026 •By Reuben Gregg BrewerShould You Forget Eli Lilly and Buy These Unstoppable Stocks Instead?Mar 2, 2026 •By Prosper Junior BakinyBuying This 1 Pharmaceutical Stock Today Could Make You a Multimillionaire RetireeMar 2, 2026 •By David Jagielski, CPAUp Over 400% in 5 Years, Is It Too Late to Invest in Eli Lilly Stock?Mar 1, 2026 •By Reuben Gregg BrewerShould You Forget Eli Lilly and Buy This Magnificent High-Yield Dividend Stock Instead?About the AuthorReuben Gregg Brewer is a contributing Motley Fool stock market analyst covering energy, utilities, REITs, and consumer staples. He is the former director of research at Value Line Publishing, where he rose from mutual fund analyst to equity analyst before leading all research operations. Reuben holds a bachelor’s degree in psychology from SUNY Purchase, a master’s in social work from Columbia University, and an MBA from Regis University. He has been featured as a financial expert on CNBC and in the Financial Times, Barron’s, and InvestmentNews.TMFReubenGBrewerStocks MentionedEli LillyNYSE: LLY$990.18(+0.70%)+$6.92MerckNYSE: MRK$115.87(-0.17%)-$0.20*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.