Dividend Increase: Pfizer Inc.

Pfizer Inc. (PFE) just declared $0.34 quarterly dividend. This is an increase of 6.3% from $0.32.

I own 35 shares, so this will increase my annual dividend income by $2.80 to $4,588.14

I updated both my Passive Income page as well as my Portfolio page to reflect the changes.

My Thoughts:

I made my first and only buy of PFE in mid-August this year. The company has increased its dividend for 8 straight years and has a 5-year dividend growth rate of 8.5%. However, with this year dividend increase of 6.3% and last year dividend increase of 6.7%, we see that PFE is trending lower with their increases. I expect the same kind of increases for the next few years.

PFE has a dividend payout ratio of 77%. That ratio is on the high side; however, CFRA expects for an earning growth of 8% for the next three years. If PFE grows earning at 8% for the next three years in combination with the conservative dividend growth, I see no issues with the current payout ratio. The ratio looks like it will start lowering in the next few years.

In my Seeking Alph article, I talked about PFE in great details. I came up with a fair price of $37.61. That price still stands. This means that PFE is 1.78% undervalued.

Pfizer is slightly undervalued to fairly valued and I recommend it as a HOLD at this time.

Source: fastgraphs.com

Liking the dividend increase? Want to own more shares of PFE? What do you think?

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