Does Pfizer Inc. (PFE)’s Dividend Have Room to Soar?

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Future growth
Up to this point, we’ve looked at Pfizer Inc. (NYSE:PFE)’s dividend in the past, and we’ve also seen how its stock is being perceived by the market today. However, the most important factor to consider when understanding a dividend’s future is where the company’s cash flow is heading. It’s hard to generate more cash without growing sales, so let’s take a look at what industry analysts are expecting for Pfizer’s revenue growth relative to peers this year.

Foolish bottom line
The negative impact of Lipitor’s patent cliff is evident in the chart’s above. The company’s payout ratio rose quite a bit from 2011 to 2012, but it still sits comfortably below 50% and shouldn’t be concerning to investors. Pfizer wasn’t alone in dealing with generic competition for blockbuster drugs, which is a big contributor to the industrywide rise in payout ratios.

The company’s finally passed the anniversary of the November 2011 Lipitor patent expiration in the U.S., but likely won’t return to robust revenue and earnings growth in the near future due to additional patent issues. Pfizer Inc. (NYSE:PFE) certainly has the capacity to continue raising its dividend, but I wouldn’t expect any significant boost until the company returns to top-line growth.

The article Does Pfizer’s Dividend Have Room to Soar? originally appeared on

Brenton Flynn has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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