Pfizer’s (PFE) earnings declined 18% year-over-year in Q3, but this drop is largely attributed to one-time costs related to its licensing deal with 3SBio. The company has raised and narrowed its full-year adjusted diluted EPS guidance to a range of $3.00 to $3.15, showing confidence in the financial performance for the fourth quarter.
Pfizer’s cost-reduction initiatives are on track, aiming to deliver at least $4.5 billion in cumulative net cost savings by 2025 and around $7.7 billion by 2027. The majority of this savings will be available for capital allocation priorities, including funding the dividend.
The company’s patent cliff strategy appears to be working, with revenue from recent launches and acquired products jumping 9% year-over-year in Q3. Pfizer expects that these growth drivers will largely offset the negative impact of its upcoming losses of exclusivity.
Management has expressed support for the dividend, with CEO Albert Bourla committing to maintaining and growing the payout over time. The company’s deleverage has also given it increased flexibility to do both business development and maintain the dividend.
While Pfizer wasn’t included in the Motley Fool Stock Advisor’s top 10 list, investing $1,000 now could be a good option for income investors who want to keep dividends flowing. With its forward dividend yield of 7%, this drop may not significantly impact the long-term dividend prospects.
Source: https://www.nasdaq.com/articles/why-pfizers-7-yielding-dividend-just-became-safer-and-more-tempting