July 10, 2012
The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves discusses topics across the investing world.
Over the next several weeks we'll be looking at each of the components of the Dow Jones Industrial Average and subjecting each of them to a dividend checkup. Today, we're looking at Pfizer. Pfizer is one of the top drug companies in the world, and its big pharma competitors include Merck and Novartis. Pfizer is up around 5% for the year, which is slightly below the Dow average return of around 6% for the year; Merck is up 10.5%. Pfizer had its dividend cut in 2009, but it increased it by 10% at the beginning of this year. Currently it delivers a yield of 3.8%, compared with 2.9% for the Dow as whole. Competitor Merck's yield is slightly higher at 4.0%; Johnson & Johnson is slightly lower at 3.6%. Pfizer is an extremely strong company that delivers solid returns on capital, and has a decent pipeline. It does face fierce competition from Merck, Teva, and Novartis, but it looks like a pretty good bet for the long term.
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