Investor enthusiasm hit a fever pitch following the 2024 election, but took a punch to the gut recently. Market indexes have been falling as investors are beginning to assume President Trump will make good on repeated promises to raise the cost of goods entering the U.S. from the country's largest trading partners through tariffs.
The biggest trade war losers to date have been the richly valued tech stocks at the top of the S&P 500 (^GSPC 0.21%) index. All the "Magnificent Seven" stocks finished March 18 down more than 15% from peaks they had set less than three months earlier. Tesla suffered the most severe setback, falling by more than half from the peak it reached last December.
With its largest components in free fall, the S&P 500 index finished March 18 down 8.6% from an all-time high it set in February. It's officially out of correction territory, for now. And with a lack of details available regarding the upcoming trade war, it's hard to say how things will shake out in the long run.
The stock market's performance in the coming year feels less certain than usual. Luckily, there's a well-established, dividend-paying business offering an ultra-high yield above 6% at recent prices. Pfizer (PFE +1.30%) stock has been trading well below its previous peak, even though it seems like a good way to avoid tariffs. Imported ingredients are a small percentage of total sales for drugmakers like Pfizer that generally don't sell products once they've lost patent-protected market exclusivity.
A reliable dividend payer offering an ultra-high yield
This innovative drugmaker spun off its portfolio of off-patent drugs in 2020. Despite the sale of many well-known brands, it's still one of the world's largest pharmaceutical businesses, with total sales growing 7% in 2024 to reach $63.6 billion.
NYSE: PFE
Key Data Points
Pfizer stock has delivered its long-term shareholders a dividend that has grown for 16 consecutive years. The pace of those dividend raises hasn't been insignificant, either. The payout's grown by about 54% over the past decade.
Investors don't necessarily need Pfizer to raise its payout rapidly to realize a market-beating gain over the long run. At its beaten-down price, the stock offers a big 6.6% dividend yield.
Why this reliable dividend stock has been beaten down
Despite many years of reliable dividend growth, Pfizer stock is down by more than half from the all-time high it reached a few years ago. Sales of Comirnaty, a COVID-19 vaccine, and Paxlovid, an antiviral treatment, soared during the pandemic, but collapsed much faster than most investors expected.
In addition to COVID-19 product sales that sank faster than predicted, upcoming patent cliffs for its top-selling products could limit growth over the next several years.
For example, Eliquis, an oral blood thinner that Pfizer marketed in collaboration with Bristol Myers Squibb, is nearing the end of its market exclusivity period. Eliquis was responsible for 11.6% of Pfizer's total revenue in 2024. It's expected to begin facing generic competition in the U.S. market in 2028.
In addition to an upcoming patent cliff for Eliquis, Pfizer's top-selling cancer therapy, Ibrance, is losing market share to competition. Ibrance sales fell 8% last year to $4.4 billion. In comparison, sales of Kisquali, a similar, more recently launched therapy from Novartis, rocketed 46% higher to reach $3 billion in 2025.
Why Pfizer looks like a buy now
Patent expirations will limit growth, but they probably won't stop Pfizer from growing its bottom line or dividend payout in the decade ahead. The company invested its COVID-19 windfall into an incredibly productive drug development pipeline. In 2023, the Food and Drug Administration approved nine new medicines from Pfizer. Last year wasn't as prolific regarding completely new drugs, but the FDA still granted more than a dozen approvals to Pfizer products in 2024.
If we exclude COVID-19 product sales, which keep jumping around, and currency exchange rates, Pfizer reported total revenue that rose 12% last year.
Management expects adjusted earnings to land in a range between $2.80 and $3.00 per share this year. That's enough to meet an annualized dividend obligation currently set at $1.72 per share and continue its annual payout-raising streak.
With sales from a slew of new therapies beginning to ramp up, there's a very good chance that Pfizer can sidestep Eliquis' upcoming patent cliff without a major dent in total revenue. Scooping the stock up now could allow you to collect a big passive income stream that continues growing for at least another decade.
