When looking to invest in dividend stocks, chasing high yields isn’t always an advisable strategy. Companies with juicy yields are only worth investing in provided they can support their payouts. We saw just recently that even otherwise solid income stocks with incredible yields can resort to slashing their dividends; that’s exactly what happened to Walgreens Boots Alliance and Medical Properties Trust.
Not every high-yield stock will suffer this fate, though. Here is one that likely won’t: Pfizer (NYSE: PFE). Though the drugmaker has experienced some issues lately, long-term investors should stick with the stock. Let’s find out why.
Beyond the pandemic
Pfizer faced an aging portfolio of products and slow revenue growth (at best) before the pandemic. Things only got worse when one of the company’s products called Xeljanz, an immunosuppressant, was found to have an increased risk of cardiovascular events and cancer compared to another class of immunology drugs in a post-marketing study in early 2021. The fallout was a boxed warning for Xeljanz.
These issues (and others) explain why Pfizer decided to shake things up, get rid of slower-growing units to focus on its biopharmaceutical business, and shop for deals.
The company struck gold with its decision to enter the COVID-19 vaccine market. Beyond the stratospheric sales Pfizer was able to generate from its coronavirus-related portfolio — it became the first company in the industry to reach $100 billion in annual revenue — this success allowed Pfizer to rejuvenate its pipeline and set a foundation for a much more promising future. As they say, progress is a slow process, but it is happening for Pfizer.
Last year, Pfizer had a historic streak of brand-new product approvals. The company will likely continue down that path this year though it may not be as impressive as in 2023. Pfizer also acquired Seagen, an oncology specialist with an incredibly deep pipeline, for $43 billion. This new partnership could lead to several blockbuster products given Seagen’s raw innovative potential and Pfizer’s much larger…
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