Finding a great dividend stock to hold in your portfolio over the long-term can be a challenge in today’s market. With many companies cutting their payouts or at risk of doing so shortly, the degree of difficulty for dividend investors has gone up thanks to the pandemic and its impact on corporate earnings. Buying a great dividend-paying stock means buying a company that offers a strong yield, a history of dividend growth, a solid balance sheet, and the potential for price appreciation.
One stock that fits the bill at this time is Pfizer Inc (NYSE:PFE). It’s one of the world’s leading pharmaceutical companies that could end up becoming a great long-term pick for dividend investors. With volatility on the rise again and continued concerns over economic recovery, adding a steady source of income to your portfolio with a reliable dividend stock makes a lot of sense. Let’s take a deeper look at why Pfizer stock is an attractive option at this time.
A pharmaceutical company’s future growth is directly related to what drugs the company is working to bring to market. Pfizer has decades of experience in successfully developing and manufacturing pharmaceuticals and biotech drugs. Its robust pipeline of new drugs has a lot of profit potential that many investors are overlooking. The company recently brought to market a drug called Vyndaqel, which helps to treat a rare cardiovascular disease. This drug has significant growth potential as only 15% of patients are diagnosed in the US and there wasn’t medicine available to treat this rare disease before Vyndaqel. Other exciting new drugs that could be approved in the next few years include immunology drug Abrocitinib, cancer drug Lorbrena, and other rare disease drugs.
The company is aiming to bring up to 25 new drugs to the market by the year 2025. Pfizer also has tons of patent-protected drugs in its portfolio with pricing power. These patented drugs provide the company with time to develop new drugs before generic competitors can replicate Pfizer’s drugs and sell them for less. The bottom line here is that Pfizer has the size, financial resources, and research power to continue bringing new and potentially game-changing drugs to market for years to come.
Another reason why Pfizer is a strong stock for investors is the fact that the company is working hard on a COVID-19 vaccine. Pfizer partnered up with BioNTech (NASDAQ:BNTX) to create a vaccine that is moving through the regulatory approval stages quickly. The company announced that its vaccine candidate is in a Phase 2/3 trial which could progress to a filing for regulatory approval soon. This is big news for both the world and for the company.
If Pfizer’s COVID-19 vaccine has success in the Phase 2/3 trial, the company will seek regulatory approval by October 2020. Pfizer’s goal is to supply up to 100 million doses worldwide by the end of 2020. The company already has an agreement with the U.S. government and will receive $1.95 billion for the first 100 million doses. While investors shouldn’t expect a massive boost to long-term cash flows from the vaccine thanks to competitive pricing, the fact that the company is one of the leading candidates to successfully create a COVID-19 vaccine is encouraging for both the company’s public image and top-line growth.
High-Yield and Strong Balance Sheet
Whenever you are assessing a dividend stock, it’s important to look into the dividend yield that the stock offers as well as the overall financial strength of the company. Pfizer is a stock that offers a 4.2% dividend yield and has a strong balance sheet with over $1.8 billion in Cash & Equivalents as of the last earnings report. That means investors should be able to rely on the current payout for years to come. The yield saw a nice boost when the company exited the Dow Jones Industrial Average earlier in September and saw its shares sink, offering investors an intriguing entry point.
Since Pfizer has so many key products and patented drugs like Lipitor, Prevnar 13, and Viagra in its portfolio, dividend investors can rely on strong cash flows to back up the payouts. The company has a strong history of paying dividends and recently declared its 327th consecutive quarterly dividend for Q3 2020. That type of consistency is what dividend investors love to see and a big reason why Pfizer is a solid pick.
Before you consider Pfizer, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Pfizer wasn't on the list.
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