What's better than a stock that pays great dividends? How about one that's also a bargain? Granted, most strong dividend stocks aren't available at a discount in the current high-flying market. However, that doesn't mean you can't find them at all.
I can think of several dividend-paying, deep-value stocks to buy in August. One stock stands at the top of my list: pharmaceutical giant Pfizer (PFE 0.90%).
Image source: Getty Images.
Pfizer's juicy dividend
Pfizer's forward dividend yield currently stands at 6.86%. This yield is so attractive that I wondered if it's the highest of any healthcare stock. It is (or was recently, anyway). As of Aug. 19, 2025, Pfizer's forward dividend yield was the juiciest in the healthcare sector.
The big drugmaker's dividend track record is impressive, too. Pfizer has paid 347 consecutive quarterly dividends. The company has increased its dividend for 16 consecutive years.
Can Pfizer keep the dividends flowing and growing? I think it can. So does the company's management team. CFO David Denton reiterated in Pfizer's second-quarter earnings call that the dividend program remains first on the drugmaker's capital allocation priorities, stating, "Our strategy consists of maintaining and growing our dividend over time."
Sure, Pfizer's dividend payout ratio of around 90% is higher than I'd like. However, the pharmaceutical company's earnings continue to grow. Pfizer even recently raised its full-year earnings guidance. It's also on track to cut costs by around $7.2 billion by the end of 2027, which will further improve the bottom line and the payout ratio.
A tremendous value
Let's shift gears to discuss Pfizer's tremendous value. The stock's forward price-to-earnings (P/E) ratio is only 8.3. That's a fraction of the S&P 500's forward earnings multiple of 22.8. It's also well below the S&P 500 healthcare sector's average forward P/E of 16.5.
One question comes to mind, though: Is Pfizer a value trap? After all, the drugmaker faces a patent cliff with several of its top-selling products losing patent exclusivity over the next few years. The list includes blood thinner Eliquis, which generated nearly $7.6 billion for Pfizer last year, and breast cancer drug Ibrance, which raked in almost $4.4 billion in sales.
I think Pfizer is in a better position than meets the eye to navigate its patent cliff. The company has several new products with strong growth prospects, notably including migraine drug Nurtec ODT, RSV vaccine Abrysvo, and multiple myeloma drug Elrexfio. Pfizer's pipeline also features 108 candidates, with 28 late-stage programs and four awaiting regulatory approvals.
Wall Street seems to agree that Pfizer isn't a value trap. The consensus 12-month price target reflects an upside potential of over 13%. Pfizer's price-to-earnings-to-growth (PEG) ratio, which is based on five-year earnings growth projections of analysts surveyed by LSEG, is a low 0.86. This PEG ratio suggests that analysts aren't overly concerned about Pfizer's growth prospects, even with multiple drugs losing exclusivity.
Some risks
Pfizer does face some risks. Although I believe it will weather the patent cliff relatively well, the losses of exclusivity make the company more dependent on the success of its new drugs and pipeline programs. Sometimes, new drugs don't perform as well as expected. Pipeline candidates can also sometimes flop in clinical trials.
President Trump's threatened pharmaceutical tariffs could negatively impact Pfizer. So could his administration's push to implement "most-favored-nation" drug pricing, which aims to tie U.S. drug prices to the lowest prices paid by other developed nations.
Again, though, I think Pfizer will survive and thrive -- just as it has for 176 years. For investors seeking high dividend yields and deep value, I view Pfizer as the best pick on the market right now.
