Oops, something went wrong
Pfizer (NYSE: PFE) is not hitting on all cylinders today. That's why the stock is down more than 50% from its 2021 high, as of this writing, and its payout ratio is well north of 100%. Dividend investors may find the huge 6% yield attractive, but before buying, you have to ask if that dividend is actually sustainable. The answer is likely yes, here's why.
The financial impact of dividends shows up on the cash flow statement, not the earnings statement. This is important to understand as you look at the payout ratio, which compares dividends to earnings. It is definitely a good thing if earnings cover the dividend, which Pfizer's earnings do not right now, but it isn't necessary for this to be the case for a company to continue supporting its dividends.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
When you compare Pfizer's cash flow to its dividend, using the cash dividend payout ratio, the figure comes in at roughly 90%. That's high, but it suggests the pharmaceutical giant can continue covering the payment for now. Backing that up is nearly $12.7 billion in cash and short-term investments on its balance sheet at the end of the second quarter of 2026. The company paid roughly $4.9 billion in dividends through the first half of the year. It could cover more than a year of dividend payments with that cash alone.
