Pfizer Inc. (PFE) vs. UnitedHealth Group Inc. (UNH): Which Dow Jones Industrial Average (.DJI) Stock’s Dividend Dominates?

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Round four: strength
A stock’s yield can stay high without much effort if its share price doesn’t budge, so let’s take a look at the growth in payouts over the past few years. If you bought in several years ago and the company has grown its payout substantially, your real yield is likely to look much better than what’s shown above.

PFE Dividend Chart

PFE Dividend data by YCharts.

Winner: UnitedHealth, 2-2

Round five: flexibility
A company needs to manage its cash wisely to ensure that there’s enough available for tough times. Paying out too much of free cash flow in dividends could be a warning sign that the dividend is at risk, particularly if business weakens. This next metric analyzes just how much of their free cash flows our two companies have paid out in dividends over the past four quarters:

PFE Cash Div. Payout Ratio TTM Chart

PFE Cash Div. Payout Ratio TTM data by YCharts.

Winner: UnitedHealth, 3-2

In a surprise win, the low-margin health insurer comes out ahead of the high-yielding pharmaceutical giant. There’s no doubt that shareholders have enjoyed great gains from both stocks in recent years, but a higher ceiling on potential dividend increases, combined with a fantastic recent history of such increases, puts UnitedHealth Group Inc. (NYSE:UNH) on top today. Would you rather invest in America’s top pharmaceutical maker or its top health insurer? With Obamacare on the way to full implementation and a patent cliff on Pfizer Inc. (NYSE:PFE)’s horizon, this could be a more difficult choice than many investors think.

The article Pfizer vs. UnitedHealth: Which Dow Stock’s Dividend Dominates? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool recommends UnitedHealth Group (NYSE:UNH).

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