HomeBusiness1 top dividend stocks to load up on now

1 top dividend stocks to load up on now

For nearly a century, dividends have been the silent workhorses of the stock market, consistently contributing the majority of U.S. stock returns. The 98-year data is not only a historical record, but also a testament to the resilience of dividend-paying stocks.

Amid market turbulence, economic fluctuations and the ever-changing tides of investor sentiment, dividends have provided a steady stream of income, acting as a financial cushion for investors.

US dollars arranged in a pattern indicating growth.

Image source: Getty Images.

The takeaway for those on Main Street is clear: While growth stocks have had their moment in the sun since the 2008 financial crisis, the enduring value of dividend stocks cannot be overstated. They form the basis of a portfolio designed for the long term and that balances stability and growth potential.

One healthcare giant stands out

In the defensively oriented healthcare sector, one dividend stock stands out from the crowd: Pfizer (NYSE:PFE). The pharmaceutical titan boasts an attractive dividend yield, a compelling valuation and a legendary track record of innovation within one of the fastest growing industries in the world. Read on to learn more about this blue chip dividend stock.

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Pfizer: An exaggerated bear attack

Pfizer’s recent performance has sparked debate among investors. The pharmaceutical giant’s shares are down 18% in the past twelve months and trade at a modest 12.7 times earnings. This figure stands in stark contrast to the 17x average of its major pharmaceutical peers and the S&P500‘s 20.8x handle. Still, despite this bearish sentiment, there are compelling reasons to believe the market may have overreacted.

One of Pfizer’s most attractive features is its annualized dividend yield of 5.9%, a figure that far exceeds the S&P 500’s average yield of 1.35%. High-yield dividend stocks like Pfizer have historically outperformed most asset classes over extended periods of time, especially over 20 years or more. This track record suggests that Pfizer’s current dip could be a temporary dip in an otherwise stable upward trajectory.

Another important point to understand is that Pfizer is on track to achieve its ambitious target of $4 billion in cost savings by the end of 2024. This initiative is expected to significantly strengthen operating margins and thereby improve the company’s financial health.

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The productivity of Pfizer’s pipeline is also increasing, with several successful drug launches in recent times. The cardiovascular drug Vyndaqel in particular is a shining example of the company’s innovation efforts. Such innovations are indicative of Pfizer’s continued commitment to addressing unmet medical needs and expanding its market presence.

In short

While the bearish outlook for Pfizer stock seems scary, closer examination reveals that it is a company with solid fundamentals and a clear vision for the future. With its attractive dividend yield, cost-cutting measures, promising pipeline and strategic focus, Pfizer appears well positioned to recover and continue its legacy as a leading force in the pharmaceutical sector.

Contrarian investors, in turn, might wonder whether the current pessimism toward this major pharmaceutical stock is indeed justified. If not, it might be a wise move to start buying these super-cheap, high-yield dividend stocks.

Should you invest €1,000 in Pfizer now?

Consider the following before buying shares in Pfizer:

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George Budwell has positions in Pfizer. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool has a disclosure policy.

1 Top Dividend Stock to Charge Now was originally published by The Motley Fool

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