What Pfizer actually does
Pfizer is a pharmaceutical and biotechnology company founded in 1849 in New York City, where it is also headquartered. It makes medicines and vaccines for a wide range of diseases. It became a household name for its COVID-19 vaccine and treatment, and it bought the cancer-drug company Seagen to strengthen its pipeline.
How the business makes money
Pfizer depends on patented products, such as vaccines for pneumonia, heart medicines and cancer drugs. It also earns revenue from products developed with partners.
The COVID years brought a huge but temporary surge in sales. As those revenues fell, the company had to cut costs and rebuild growth. Several of its major drugs also lose patent protection in the coming years, which creates a patent cliff.
The dividend story
Pfizer has a long record of paying dividends and pays quarterly. After COVID revenue declined, the dividend became large compared with earnings, and investors have watched the payout ratio closely.
A higher yield can be attractive but should be checked against cash flow. Read our guide on high yields and dividend traps.
What to keep an eye on
- Patent expiries. Replacing lost sales requires new drug launches.
- Payout ratio and debt. Acquisitions raise borrowing.
- Pricing pressure. Government drug-pricing rules affect revenue.
- Pipeline results. Clinical trials can succeed or fail.
Quick take
Pfizer is a major drugmaker with an attractive yield and a challenging few years ahead. The dividend looks fine as long as the pipeline and cost cuts offset the patent cliff.