Incoming patent cliffs regarding some of Pfizer's (PFE -3.25%) largest revenue streams have been pressuring the pharmaceutical stock. The price is down, but its dividend payout keeps rising. Last December, the company raised its quarterly payout for the 16th consecutive year.
The dividend yield investors could receive from Pfizer stock has risen from about 3% in early 2022 to 7% when the market closed on Aug. 5, 2025. Reliable dividend-paying stocks like Pfizer generally don't offer yields this high unless there's a reason to be concerned about the underlying business.
While the company should have no problem keeping up with its 16-year-long dividend-raising streak in the near term, upcoming patent cliffs could make dividend raises unusually challenging a few years down the road. Here's a look at Pfizer's recent performance in light of the long-term challenges it faces to see if it's a good dividend stock to buy now.
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Pfizer's recent performance
Usually, when the yields that dividend stocks offer jump from low single digits to high single digits, it's because they aren't earning enough. This isn't the case at Pfizer. The pharmaceutical giant recently raised its profit forecast for the year to an adjusted $3 per share at the midpoint of the guided range. With its dividend commitment currently set at $1.72 annually, slightly raising the payout again this December shouldn't be a problem.
Pfizer's earnings outlook also includes an acquired in-process research and development (IPR&D) charge of $1.35 billion related to a licensing agreement with 3SBIO. The deal is expected to lower reported earnings by about $0.20 per share this year.
Pfizer's earnings guidance includes the impact of new tariffs from China, Canada, and Mexico. It also includes potential price changes demanded by the Trump administration in a letter the company received on July 31, 2025.
At $3 per share, the midpoint of management's guided range for adjusted earnings this year is significantly lower than the $3.11 per share in adjusted earnings that Pfizer reported in 2024. Once you factor in presidential pricing demands, new taxes, and a significant IPR&D charge, this year's forecast earnings estimate isn't anything to complain about.
The next five years could be challenging
While 2025 looks like another year of steady earnings, several of the company's blockbuster drugs are losing patent-protected market exclusivity soon. For example, Eliquis, an oral blood thinner, is on pace to generate over $8 billion in sales for Pfizer this year. Eliquis is expected to face generic competition in the European Union and U.S. markets beginning in 2026 and 2028, respectively.
Earlier this year, at a healthcare investor conference, Pfizer CEO Albert Bourla said a loss-of-exclusivity wave could reduce annual revenue by $17 billion to $18 billion between now and 2030.
Pfizer is one of the world's largest pharma businesses with dozens of marketed products that generated $63.6 billion in sales last year. Replacing expected losses from upcoming patent cliffs won't be easy. Luckily, Pfizer has been preparing for the inevitable challenges with investments in its next generation of blockbuster drugs.
In 2023, Pfizer invested about $43 billion into Seagen, an oncology therapy developer with several recently launched treatments. A combination of big acquisitions and relatively small in-licensing deals, such as the recent one with 3SBIO, is expected to deliver $20 billion in new annual sales by 2030.
Time to buy?
Individual drug launches are hard to predict. I like Pfizer's chances of overcoming its patent cliff problem because its new drug lineup and late-clinical-stage pipeline seem large enough to overcome the upcoming losses.
Pfizer probably has what it takes to maintain its dividend over the long run, but this is a long way from guaranteed. Adding some shares is probably a smart move for most investors. That said, make sure it's a small part of a much larger portfolio.
