Pfizer Just Declared Its 352nd Straight Quarterly Dividend. Is the 6% Yield Safe?
Key PointsThe drugmaker faces significant patent cliffs this year and next.
Pfizer has declared its fourth-quarter dividend, marking its 352nd consecutive quarterly payment. This yields an impressive 5.9%, surpassing the average S&P 500 yield of just 1%. However, investors are questioning whether this dividend is sustainable. Although Pfizer has raised its dividend every year since 2010, the company faces patent cliffs for several key drugs, including Eliquis, Xeljanz, Ibrance, and Xtandi.
These expiries could impact the company's cash flow and ability to maintain its high dividend. Despite this, Pfizer's robust product portfolio, including vaccines like Nurtec, Lorbrena, and Padcev, has helped boost revenue and free cash flow, which have surpassed the company's dividend payments. Management has also committed to maintaining and potentially growing the dividend, providing investors with some reassurance.
Still, the success of Pfizer's dividend depends on its ability to launch new drugs that can offset the revenue loss from expiring patents. Investors are cautiously optimistic, with the stock up more than 17% this year and outperforming the S&P 500 by over 4%.
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