Pfizer: How A 15% Decline Is A Gift To Income Investors

Pfizer (PFE) stock has declined 15% from its 52-week closing high, of $37.31 per share. The positive aspect of this is that it gives income investors a better buying opportunity.

Because of its share price dip, Pfizer’s dividend yield has elevated to nearly 4% (it’s currently at 3.8%). This is a notable event. Pfizer’s dividend yield has rarely reached 4% over the past five years.

And, Pfizer has the ability to raise its dividend each year…The company is highly profitable and is likely to increase earnings-per-share going forward.

In fact, Pfizer has raised its dividend payments for 7 consecutive years. The company will be a Dividend Achiever in 3 years if it continues its current trend. Dividend Achievers are a group of 273 stocks with 10+ consecutive years of dividend increases. You can see a full list of the Dividend Achievers here.

The average dividend yield in the S&P 500 hovers around 2%. In a low interest rate climate, Pfizer’s ~4% dividend yield is high appealing to income investors.

Business Overview

Pfizer is a pharmaceutical giant. The company operates in two core segments, which are Innovative Products and Established Products. The two segments are nearly equal in size.

The Innovative Products business consists of the Global Innovative Pharmaceutical and the Global Vaccines, Oncology, and Consumer Healthcare businesses.

Global Innovative Pharmaceuticals focuses on therapeutic areas like inflammation, immunology, cardiovascular, neuroscience, pain, and rare diseases. The major brands in this area include Xeljanz, Eliquis, Lyrica, Enbrel, and Viagra.

The Established Products segment is comprised of legacy brands that have lost or will soon lose market exclusivity. It also includes branded generics, generic sterile injectable products, biosimilars, and infusion systems.

Pfizer is a global company. Approximately 56% of the company’s sales come from outside the U.S.

pfe-revenue-by-market

Source: 2015 Annual Report, page 21

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Chee Hin Teh 4 years ago Member's comment

Thanks for sharing