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Pfizer Inc. (NYSE:PFE) has long been a favorite among income investors, thanks to its generous dividend yield and history of consistent payouts. With a forward dividend yield of 5.83% and a 13-year streak of annual dividend increases, the pharmaceutical giant seems to check all the boxes for dividend seekers. However, before adding Pfizer to your income portfolio, it’s worth exploring an alternative that could potentially offer a more compelling short-term income opportunity.
There’s no denying Pfizer’s dividend track record is impressive. The company has raised its quarterly payout for over a decade, and even during the challenging times of the COVID-19 pandemic, Pfizer managed to maintain its dividend growth trajectory. The current annual payout of $1.68 per share translates to a healthy 5.83% yield, which is well above the S&P 500’s average yield of around 1.6%.
Moreover, Pfizer’s payout ratio of 116.20% might raise some eyebrows, but it’s important to note that this elevated figure is largely due to non-cash charges and short-term headwinds. As the company continues to generate strong cash flows from its core business and COVID-19 products, the payout ratio is expected to normalize over time.
Pfizer’s recently reported Q1 2024 results highlight the company’s resilient performance and positive outlook. The company delivered revenues of $14.9 billion, driven by continued growth in key products like Eliquis, Vyndaqel, and oncology drugs Ibrance, Xtandi, Padcev, and Adcetris. Pfizer also reaffirmed its full-year 2024 revenue guidance of $58.5 to $61.5 billion and raised its adjusted diluted EPS guidance to $2.15-$2.35.
Analysts also remain bullish on Pfizer’s prospects. The three most recent analyst ratings from Morgan Stanley, BMO Capital and Cantor Fitzgerald have an average price target of $36.67, implying a potential upside of 27.41% from current levels.
However, despite Pfizer’s attractive yield and solid fundamentals, there is one key factor income investors should consider: the potential for a U.S. recession. Many economists believe that the U.S. economy is nearing a downturn, which could put pressure on stock prices, even for defensive names like Pfizer. In the event of a recession, there might be an opportunity to scoop up Pfizer shares at an even more appealing valuation and lock in an even higher yield.
An Alternative High-Yield Opportunity
For investors seeking high short-term income while waiting for a potential recession-driven dip in Pfizer’s stock price, Basecamp Alpine Notes from EquityMultiple could be an intriguing alternative. This cash management tool offers a target yield of 9% over a brief 3-month term, with a low minimum investment of just $1,000.
The beauty of Basecamp Alpine Notes is that they allow investors to earn an attractive yield on their cash while retaining the flexibility to redeploy that capital when better opportunities arise. Rather than tying up funds in Pfizer shares today, investors could park their cash in Basecamp Alpine Notes, earn a 9% annualized return, and then have dry powder ready to deploy if Pfizer’s stock price becomes even more attractive.
Basecamp Alpine Notes also provide a level of simplicity and predictability that can be appealing in uncertain economic times. With zero fees and monthly compounding, investors know exactly what return they can expect over the 3-month term. And with EquityMultiple’s strong track record of meeting all payment obligations, investors can have confidence in the platform’s reliability.
Visit EquityMultiple’s website to learn more about Basecamp Alpine Notes.
Of course, no investment is risk-free, and Basecamp Alpine Notes are no exception. As with any investment, it’s crucial to conduct thorough due diligence and carefully consider how the notes fit into your overall financial plan.
But for income investors who are considering buying Pfizer for its 5.8% dividend yield, Basecamp Alpine Notes offer an attractive alternative – a way to generate high short-term income while keeping your options open for future opportunities. In a market full of uncertainty, that kind of flexibility can be invaluable.
This article Thinking Of Buying Pfizer For Its 5.8% Dividend Yield? Consider This Alternative Option Instead originally appeared on Benzinga.com
Source: finance.yahoo.com