The following excerpts from Morningstar’s analyst report titled “Cost-saving plans and recent product launches should help mitigate losses” illustrates Pfizer’s position and strength in the pharmaceutical industry:
“Pfizer’s foundation remains solid, based on strong cash flows generated from a basket of diverse drugs. The company’s large size confers significant competitive advantages in developing new drugs. This unmatched heft, combined with a broad portfolio of patent-protected drugs, has helped Pfizer build a wide economic moat around its business.
Pfizer’s size establishes one of the largest economies of scale in the pharmaceutical industry. In a business where drug development needs a lot of shots on goal to be successful, Pfizer has the financial resources and the established research power to support the development of more new drugs. Also, after many years of struggling to bring out important new drugs, Pfizer is now launching several potential blockbusters in cancer, heart disease, and immunology.”
Morningstar also cites Pfizer Inc. (NYSE:PFE)’s powerful distribution network in conjunction with the above that support a wide moat. Therefore, even though recent historical growth has been less than exciting, Pfizer does produce strong cash flows supporting their dividend and this establishes them as a blue-chip dividend paying stock.
F.A.S.T. Graphs™ Video: Offering A More Comprehensive Look At Pfizer’s Dividend Paying Capacity
Summary And Conclusions
To conclude and summarize, I present Pfizer Inc. (NYSE:PFE) as an above-average yielding high-quality dividend-paying stock. In this regard, it fits my specific investment objective of above-average current yield with the opportunity to see that income increase over time. However, although I do not expect it to be a high capital gains generating investment, I do believe its current valuation, coupled with its expected future growth should produce a reasonable level of capital appreciation in addition to its above-average dividend income potential. Consequently, I offer Pfizer as a fairly valued blue-chip dividend paying stock worthy of further research and due diligence.
Disclosure: Long ETP
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.
Note: This article is written by Chuck Carnevale and was originally published at FASTgraphs.com.
