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Pfizer Inc. (NYSE:PFE) has long been a favorite among income investors, thanks to its generous dividend yield and history of consistent payouts. With a dividend yield of 5.83% and a series of annual dividend increases over thirteen years, the pharmaceutical giant seems to tick all the boxes for dividend seekers. However, before adding Pfizer to your income portfolio, it’s worth exploring an alternative that could potentially provide a more attractive near-term income opportunity.
There’s no denying that Pfizer’s dividend track record is impressive. The company has been increasing its quarterly payouts for more than a decade, and even during the challenging times of the COVID-19 pandemic, Pfizer managed to maintain its dividend growth trajectory. The current annual payout of $1.68 per share translates into a healthy yield of 5.83%, which is well above the S&P 500’s average yield of around 1.6%.
Additionally, Pfizer’s payout ratio of 116.20% might raise some eyebrows, but it’s important to note that this high figure is largely due to non-cash costs and near-term headwinds. As the company continues to generate strong cash flows from its core businesses and COVID-19 products, the payout ratio is expected to normalize over time.
Pfizer’s recently reported first quarter 2024 results highlight the company’s resilient performance and positive outlook. The company generated revenues of $14.9 billion, driven by continued growth in key products such as Eliquis, Vyndaqel and oncology drugs Ibrance, Xtandi, Padcev and Adcetris. Pfizer also reaffirmed its full-year 2024 revenue guidance of $58.5 to $61.5 billion and increased its adjusted diluted earnings per share to $2.15-$2.35.
Analysts also remain optimistic about Pfizer’s prospects. The three most recent analyst ratings of Morgan Stanley, BMO Capital, and Cantor Fitzgerald have an average price target of $36.67, implying a potential upside of 27.41% from current levels.
However, despite Pfizer’s attractive returns and solid fundamentals, there is one important income factor for investors to consider: the potential for a US recession. Many economists believe the U.S. economy is approaching a downturn, which could put pressure on stock prices, even for defensive names like Pfizer. In the event of a recession, there could be an opportunity to pick up Pfizer stock at an even more attractive valuation and earn even higher returns.
An alternative opportunity for high returns
For investors looking for high short-term income while waiting out a possible recession-driven dip in Pfizer’s stock price, Basecamp Alpine Notes from EquityMultiple could be an intriguing alternative. This cash management tool offers a target return of 9% over a short term of three months, with a low minimum investment of just $1,000.
The great thing about Basecamp Alpine Notes is that they allow investors to earn attractive returns on their money, while retaining the flexibility to redeploy that capital when better opportunities arise. Instead of tying up money in Pfizer stock today, investors could park their money in Basecamp Alpine Notes, earn a 9% annualized return, and then have dry powder ready to bet if Pfizer’s stock price still becomes more attractive.
Basecamp Alpine Notes also offer a level of simplicity and predictability that can be attractive in uncertain economic times. With no fees and monthly interest payments, investors know exactly what return they can expect over the three-month period. And thanks to EquityMultiple’s strong track record of meeting all payment obligations, investors can have confidence in the reliability of the platform.
For more information about Basecamp Alpine Notes, visit the EquityMultiple website.
Of course, no investment is without risk, and Basecamp Alpine Notes is no exception. As with any investment, it is critical to conduct thorough due diligence and carefully consider how the notes fit into your overall financial plan.
But for income investors considering buying Pfizer for its 5.8% dividend yield, Basecamp Alpine Notes offer an attractive alternative: a way to generate high income in the short term while keeping your options open for future opportunities. In a market full of uncertainty, that kind of flexibility can be invaluable.
This article Are you thinking of buying Pfizer for its 5.8% dividend yield? Consider this alternative option that originally appeared on Benzinga.com
