Better Dividend Stock to Buy and Hold: Pfizer or Bristol Myers Squibb?
Pfizer and Bristol Myers Squibb are both big drugmakers with attractive dividend yields. Pfizer has a higher yield but faces higher payout ratios. Bristol Myers Squibb has a safer dividend and stronger growth prospects.
Intelligence analysis by Qwen 2.5 (3B)
Pfizer and Bristol Myers Squibb are both high-yield dividend stocks, but Bristol Myers Squibb has a safer dividend and stronger growth prospects.
Pfizer and Bristol Myers Squibb are both good for getting money from your stocks. Pfizer pays more money out of its profits, but Bristol Myers Squibb is better at making its profits grow bigger.
Analysis
Pfizer's Dividend Yield and Payout Ratio
Pfizer's forward dividend yield of 5.8% is among the highest in the S&P 500. However, its payout ratio has exceeded 100% in recent quarters, based on GAAP earnings. This is a concern for some investors.
Bristol Myers Squibb's Dividend and Growth
Bristol Myers Squibb has maintained a more comfortable payout ratio of around 55% of earnings. The company has increased its dividend for 17 consecutive years and has paid a dividend for 94 consecutive years. Its growth portfolio is now driving revenue, while the legacy portfolio is declining.
Pfizer's Growth and Pipeline
Pfizer projects high single-digit revenue growth after 2028, with promising candidates like weight-loss drug berobenatide. However, the company faces more executional risk than Bristol Myers Squibb.
Key points
- Pfizer has a higher dividend yield but faces higher payout ratios
- Bristol Myers Squibb has a safer dividend and stronger growth prospects
- Pfizer projects high single-digit revenue growth after 2028
- Bristol Myers Squibb's growth portfolio is now driving revenue
- Pfizer faces more executional risk than Bristol Myers Squibb
If Pfizer's newer products and pipeline candidates perform well, it could avoid cutting its dividend. Bristol Myers Squibb's growth portfolio is now driving revenue, which could lead to higher returns.
If Pfizer's newer products and pipeline candidates don't perform well, it could face pressure to cut its dividend. Bristol Myers Squibb's legacy portfolio is declining, which could lead to lower returns.
