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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Hey Felix
I don‘t own stocks of Pfizer (yet) but I always keep my eyes open. There is a lot to like about Big Pharma, I have Roche, Novartis, Bayer and GlaxoSmithKline positions in my portfolio.
I‘d agree, payout ratio of Pfizer is likely to decrease amid improving cash flow.
Cheers
HI Financial Shaper, Thanks for stopping by and for reading. I agree with your statements. I plan to add more once the price drops.