Better Dividend Stock to Buy and Hold: Pfizer or Bristol Myers Squibb?
One of these pharma stocks offers more income, but the other offers a safer dividend.
Pfizer and Bristol Myers Squibb are both major pharmaceutical companies that share several similarities. They both face upcoming patent expirations, generate sizable dividends, and are popular among income-seeking investors. However, choosing between the two as the optimal dividend stock requires a closer examination.
Pfizer boasts an impressive forward dividend yield of 5.8%, significantly higher than Bristol Myers Squibb's 4.3% yield. Additionally, Bristol Myers Squibb has a promising track record of dividend increases, having raised payouts for 17 straight years and 94 years overall. This longer history of consistent dividend growth makes Bristol Myers Squibb's dividend appear safer than Pfizer's.
Yet, Pfizer's higher yield and robust free cash flow allow it to comfortably meet its dividend obligations despite a payout ratio exceeding 100% in recent quarters. Pfizer also projects double-digit revenue growth post-2028, thanks to its pipeline of promising drugs like weight-loss drug berobenatide. Its upcoming patents, including those of Eliquis, Ibrance, and Xtandi, may also be offset by new products.
Bristol Myers Squibb has already transitioned from a product portfolio reliant on patent exclusivity to one driven by growth opportunities. Although its growth portfolio is now driving revenue, the contribution from its legacy product lineup (Eliquis) is in decline. Still, Bristol Myers Squibb's share price might outperform Pfizer's in the near term, offering higher total returns. For income investors, owning both Pfizer and Bristol Myers Squibb could provide a balanced approach, capitalizing on each company's strengths.
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