Pfizer (NYSE:PFE) recently reported fourth-quarter earnings that missed expectations on the top and bottom line. As a result, a jumpy stock market knocked a few percentage points off the stock price.

Despite missing consensus forecasts, Pfizer stock looks like a perfect fit for dividend portfolios. Here are five of the most important reasons to buy this pharma stock on the dip.

Man in a suit, happily holding out a calculator with the word dividends on it.

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1. The price is right

The average stock in the S&P 500 trades at 19.3 times forward estimates at the moment. Since announcing fourth-quarter earnings, shares of Pfizer have fallen to just 13.7 times the low end of the company's 2020 adjusted earnings forecast. 

Right now, the average dividend-paying stock in the S&P 500 index offers a measly 1.8% dividend yield. Pfizer shares pay out more than double the benchmark average with a 3.9% yield at the moment.

2. A 2-for-1 deal

Around the middle of 2020, Pfizer shareholders will end up owning two very different drugmakers, both of which will continue distributing profits to shareholders. The Pfizer that remains will develop new drugs and sell them until they lose patent-protected market exclusivity. 

Pfizer's post-exclusivity pharmaceutical segment, UpJohn will merge with Mylan (NASDAQ:MYL) to form a new company called Viatris. Pfizer shareholders will own 57% of Viatris and receive a significant dividend from the new company. Once the deal completes, Viatris is expected to generate free cash flow at a rate of $4 billion annually and rise from there.

A tipped-over prescription container of white pills on top of cash.

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3. Steady Viatris profits

According to Pfizer, dividends from Viatris plus dividends from the Pfizer that remains will fall in line with the amount investors receive from their shares at the moment. Sales of popular brands generally plunge once they have to fight generic competition, but Viatris will have a diverse line of products and geography on its side. The combined entity will market around 3,000 brands and molecules in 165 countries around the globe.

In 2020, Viatris is expected to generate pro forma earnings before interest, taxes, depreciation, and amortization between $7.5 billion and $8 billion from revenue expected to reach between $19 billion and $20 billion. There's a lot of operational overlap between UpJohn and Mylan, and the pair expect to squeeze out synergies that reach $1 billion annually by 2023. 

Of course, Viatris isn't simply expecting growth from synergies alone. Potential new generic versions of popular drugs losing exclusivity could add around $3 billion in annual revenue to Viatris' top line by 2023. 

4. Rapid growth from the Pfizer that remains

While Viatris delivers a dividend powered by fairly steady profits, the company that remains could deliver a payout that grows at a hair-raising pace for years to come. That's because Pfizer's enormous drug development pipeline is going to get much bigger in the years ahead.

In 2019, Pfizer used $8.9 billion to repurchase shares and spent $8.7 billion on research and development expenses. In 2020, the company will continue spending more than $8 billion on R&D, but share repurchases will take a backseat to pint-sized acquisitions and licensing of new drug candidates in the middle stages of their development timelines. 

This year, Pfizer anticipates sharing proof-of-concept data from 15 potential new drugs and we should also get to see pivotal data from five key studies. With enough financial firepower to sign a dozen significant deals per year, Pfizer's annual pipeline presentations are going to get much longer in the years to come.

A miniature shopping cart full of colorful pills, on a pile of money.

Image source: Getty Images.

5. No more cliffs

Pfizer and big pharma in general make dividend investors extremely nervous because they've seen the loss of market exclusivity for one or two key products at a time send total revenue plummeting in the past.

The Pfizer that remains will produce lumpier earnings results than Viatris from one year to the next, but steadier than shareholders experienced over the past decade. Rather than trying to offset losses for huge blockbusters with giant mergers, CEO Albert Bourla is thinking much further ahead by stocking the company's pipeline with promising assets in mid-stage clinical testing.

Hold tight with both hands

It may seem hard to believe, but Zoetis, the animal health business Pfizer spun off in 2013, has outperformed its parent by a mile. Investors that have held on since the spinoff have seen their Zoetis shares deliver a 343% total return and their Pfizer shares deliver 68% over the same time frame. 

Shares of Pfizer at recent prices would make a great addition to a dividend portfolio but investors will want to hold on tight to shares of both companies they'll end up owning for the long term.