Undervalued Dividend Stock

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Undervalued Dividend Stock

Pfizer: An Undervalued Dividend Stock to Consider

Pfizer is a reliable healthcare company that's been around for several decades. The one thing that stands out about Pfizer stock is that it pays a dividend.

The Pfizer share price is up by 10% on a YTD basis. However, the overall share price is still down by 35% in th last 5 years. The investors are worried about the future growth prospects of Pfizer.

Pfizer Has A High Dividend Yield

Pfizer stock has a dividend yield of 6.2%. That's quite high when we look at other stocks in the US market. However, the data shows that Pfizer's free cash flow was $11 billion in the past 4 quarters. So, the company has enough money to keep paying its dividend.

One reason why Pfizer is struggling has to do with incurring losses. But it is mostly due to non-cash expenses and the write-downs. The company is making an effort to make the business leaner. It has also been restructuring its expenses.

Pfizer share price shows it is trading at a forward P/E of only 10. This clearly indicates that Pfizer stock is undervalued. To give you some perspective, the average P/E of the S&P 500 is 20.

Pfizer is facing what we call the patent cliffs. This applies to several of its best-selling drugs. However, Pfizer still has a lot of promising drugs in its pipeline. Right now, there are 95 drugs in the pipeline. So, even if some of them succeed, it will be enough to bring back strong growth.

The numbers and everything suggest that Pfizer stock is highly likely to make a comeback. So, if you want to invest in an established healthcare stock with a solid history of dividends, you can consider Pfizer.

The chances of an upside in the Pfizer stock price are also very high in the medium to long term. Analysts think that the drugs in the pipeline could lead to strong revenue once they hit the market.

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