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Investing in dividend stocks requires more than chasing high returns. Companies with attractive returns are only viable investments if they can sustain their payouts.
Recent market trends have shown that even stocks with strong earnings and impressive yields, such as Walgreens Boots Alliance and Medical Properties Trust, can cut dividends.
Pfizer (NYSE:PFE) is a resilient choice. Despite the recent challenges, long-term investors should remain confident. This is why.
Pfizer could be your choice, but why?
Pfizer is a major player in the pharmaceutical and biotechnology industries, based in The Spiral in Manhattan, New York City. The company was founded in 1849 by German entrepreneur Charles Pfizer and his cousin Charles F. Erhart and has a rich history of innovation.
Pfizer is committed to prioritizing health and well-being, with the goal of responsibly creating global breakthroughs.
It’s easy to misinterpret Pfizer’s current financial results. In the first quarter, the company reported revenue of $14.9 billion, down 20% from the prior year and down 33% in adjusted earnings per share, to $0.82 compared to the first quarter of 2023 .
However, the exceptional performances in 2021 and 2022 set a high benchmark. Excluding the COVID-19 portfolio, Pfizer’s revenue rose a solid 11% year over year.
Pfizer’s long-term prospects and dividend stability
Although the COVID-19 market is still unpredictable, Pfizer’s revenues should increase once it stabilizes due to the launch of its new products. Pfizer has excellent long-term potential; it’s not just a “pandemic stock.”
Over the past ten years, Pfizer has increased dividends by 61.54%, giving a forward dividend yield of 5.87%. However, the company’s payout ratio of 182.5% could be more sustainable, possibly due to recent acquisitions.
CFO Dave Denton stated during the first quarter earnings call: “Our strategy is to maintain and grow our dividend over time, reinvest in our business at an appropriate level of financial return, and engage in value-enhancing share buyback after the reduction of our balance sheet.”
Pfizer’s latest dividend increase underlines its commitment to shareholders. The company’s dividend program is likely to remain strong as revenues and net profit recover, providing long-term benefits for those who reinvest dividends.
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This article A Dividend Stock Yielding Above 5% to Buy and Hold Forever originally appeared on Benzinga.com
