Key Points
Pfizer recently reported earnings, which weren't terribly impressive.
Concerns about its future growth have weighed on its valuation in recent years.
Impairment charges have impacted its bottom line, making it look worse than it otherwise would have been.
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Pfizer (NYSE: PFE) has been an underwhelming stock to own in recent years. Question marks about its growth and how it will do in the future, as it faces multiple patent cliffs, have resulted in investors steering away from the stock entirely. Despite persistently trading at a low valuation, there hasn't been a compelling reason for investors to load up on the stock -- it's down 38% over the past three years.
There could, however, be one enticing reason to buy the stock, and that's for its dividend. At 6.3%, the payout is significantly higher than what you'd get with the average stock on the S&P 500 , which pays just 1.1%. Could Pfizer be an underrated option for income investors?
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Is Pfizer's dividend safe?
The big question for dividend investors when it comes to a high-yielding dividend is whether it's sustainable. While everyone would love to collect a high payout, no one wants it to get cut. And that's often the biggest risk with high-yielding stocks, whether a reduction to the payout is around the corner.
Pfizer recently posted its year-end results, and its diluted earnings per share came in at $1.36. That's well below the rate of its annual dividend of $1.72 per share, raising question marks about just how safe the dividend is. But the company has reported billions in asset impairment charges that have weighed on its results.
For 2026, Pfizer forecasts that its adjusted per-share earnings will be within a range of $2.80 to $3.00. While that's on an adjusted basis, it does suggest that there may be a bit more safety with the dividend than there appears to be at first glance.
Why Pfizer could make for a solid dividend stock to own
Pfizer's revenue declined by 2% this past year, and things aren't expected to get a whole lot better for 2026. But at the same time, the company isn't experiencing a drastic downturn, either. Meanwhile, it has made many investments and acquisitions in previous years that could help strengthen its growth prospects in the future, which could make it an underrated stock to buy right now.
The stock's high dividend could offer investors a great incentive to just hang on to the investment for the foreseeable future. In the past 12 months, Pfizer's stock has actually risen by around 6% (returns as of Feb. 6). After such a drastic sell-off in recent years, the stock may not be as vulnerable to a steep decline given its more modest valuation. That's why if you're willing to be patient, it may not be a bad idea to add the healthcare stock to your portfolio today.
Should you buy stock in Pfizer right now?
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
