Is Pfizer’s Dividend Safe?
Is Pfizer’s dividend safe?
• Patent expiration
– Lipitor, Pfizer’s top selling cholesterol fighting drug, lost patent prot...
Patent expiration
First, let’s consider Pfizer’s patent calendar. The patent cliff has hit Pfizer particularly hard.
Lipit...
Reasons for dividend optimism
1. A maturing pipeline of new products
– Sales of Xalkori jumped 66% to $88 million in Q1.
–...
Cash dividend payout
Better than peers payout ratio:
Pfizer’s cash dividend payout ratio, which measures how much of the c...
Current yield
Pfizer’s current yield is a healthy 3.5%, which puts it below AstraZeneca, but above Merck.
Although Pfizer’...
.
The smartest investors know that dividend stocks simply crush their
non-dividend paying counterparts over the long term....
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Is Pfizer's Dividend Safe?

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Pfizer (NYSE: PFE) is one of the globe's biggest drugmakers, and its stock is a staple in dividend portfolios.
However, patent expiration of key drugs has shaved billions off its top line, putting pressure on Pfizer to use its substantial cash position to bolster its research pipeline. As a result, dividend investors are right to question whether sliding sales threaten its dividend payout.
In the following slideshow, you'll learn more about Pfizer's patent headwind and how Pfizer compares to industry peers like AstraZeneca and Merck when it comes to dividend payouts.

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Is Pfizer's Dividend Safe?

  1. 1. Is Pfizer’s Dividend Safe?
  2. 2. Is Pfizer’s dividend safe? • Patent expiration – Lipitor, Pfizer’s top selling cholesterol fighting drug, lost patent protection in 2011. • Lipitor was a massively successful drug for Pfizer, generating peak sales near $13 billion a year in 2006. Since losing exclusivity, sales of Lipitor have sunk, dropping to $2 billion in 2013. – Viagra lost patent protection in Europe last June. • Viagra sales in affected markets fell from $370 million in 2012 to $265 million last year. – Celebrex, Pfizer’s $3 billion-a-year drug for osteoarthritis and rheumatoid arthritis, will lose exclusivity later this year. 1 big and important question mark hangs over Pfizer’s dividend.
  3. 3. Patent expiration First, let’s consider Pfizer’s patent calendar. The patent cliff has hit Pfizer particularly hard. Lipitor’s loss of exclusivity in 2011, coupled with patent expiration of drugs including Aricept in Europe and Geodon in the U.S, have caused sales to skid from $67 billion in 2010 to $50 billion in 2013. Going forward, the calendar is more forgiving, but still challenging given Celebrex posted sales of $400 million in the U.S. during Q1 and that drug is expected to face generics by year end.
  4. 4. Reasons for dividend optimism 1. A maturing pipeline of new products – Sales of Xalkori jumped 66% to $88 million in Q1. – Sales of Inlyta grew 40% to $88 million in Q1. – FDA filing for palbociclib soon. – Late stage trials for PCSK9 cholesterol drug RN316. 2. Expanding operation margin – Operating margin has doubled from its 2010 low. 3. Rock-solid balance sheet – $33+ billion in cash & short term investments. – $15+ billion in long term investments. Pfizer is working its way through its operational challenges and new products and a healthy balance sheet boost investor confidence.
  5. 5. Cash dividend payout Better than peers payout ratio: Pfizer’s cash dividend payout ratio, which measures how much of the company’s cash is used to pay its dividend after paying for capital expenses and preferred dividends, is just 38%. That’s far better than peers Merck and AstraZeneca, giving Pfizer more potential room to increase its dividend.
  6. 6. Current yield Pfizer’s current yield is a healthy 3.5%, which puts it below AstraZeneca, but above Merck. Although Pfizer’s patent expirations pose a multibillion sales headwind, the worst appears behind it. That suggests that if new products grow quickly and promising drugs win approval, Pfizer’s cash position and relatively low payout ratio would allow it to increase its dividend.
  7. 7. . The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor’s portfolio. To see our free report on these stocks, just click here now.

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