How to Invest in Pfizer

In late 2021, the success of Pfizer's COVID-19 vaccine had practically everyone wondering how to invest in Pfizer. But as of March 2024, the company's shares had tanked more than 50% from their late-2021 and early-2022 highs as sales of the Comirnaty vaccine and its Paxlovid drug slowed significantly. Pfizer also faces a patent cliff for some of its best-selling drugs.

Still, there are a few reasons to be hopeful about Pfizer, including recent acquisitions and promising drugs in its pipeline. Let's discuss how to invest in Pfizer and whether this healthcare stock deserves a place in your portfolio.

How to buy

How to buy Pfizer stock

You can easily buy stock in Pfizer or any publicly traded company by following these steps:

Step 1: Open a brokerage account

You'll need to open a brokerage account to buy and sell stocks. Most brokerage companies require you to be at least 18 years of age to open an account. You'll need to provide some identifying information, such as your name, date of birth, Social Security number, and contact information. Then, you'll need to deposit money into the account to begin trading.

Step 2: Figure out your budget

Once you fund your account, you'll need to set an investing budget. You'll need to decide how much to invest in Pfizer and how much to invest overall. It's essential to own a well-diversified mix of investments. Usually, the best way to do this is to make exchange-traded funds (ETFs) or mutual funds the meat and potatoes of your portfolio, then add some individual stocks into the mix.

Step 3: Do your research

It's important to understand how a company makes money, its competitive advantages, and the potential risks before you buy shares of the stock. For a pharmaceutical stock like Pfizer, you'd want to know about any upcoming patent expirations and what drug candidates are in its pipeline before you invest.

Step 4: Place your order

Now it's time to place your order. You'll need to enter Pfizer's stock ticker (PFE) and the number of shares you want to buy. You'll have the option of placing a market order or a limit order. A market order tells your broker to execute the trade immediately. With a limit order, you're telling your broker to make the purchase only if the stock price dips below a certain level.

Should I invest

Should I invest in Pfizer stock?

Tanking sales of Comirnaty and Paxlovid aren't the only troubles for Pfizer. In the next few years, Pfizer will lose patent exclusivity for several of its best-selling drugs, including Eliquis, which is used to treat blood clots in adults; breast cancer medication Ibrance; and the Prevnar 13 pneumococcal conjugate vaccine.

All told, the looming patent cliff could cost Pfizer $17 billion in revenue from 2025 through 2030. But Pfizer also has several promising drug candidates in its pipeline, one of which is a combo COVID-19/flu vaccine.

Its acquisition of Biohaven will add upcoming migraine drugs Nurtec and Zavzpret to its portfolio. The company says 2023 was a record year for Food and Drug Administration (FDA) approvals and that its recent acquisition of oncology-focused biotechnology company Seagen could lead to as many as eight blockbuster drugs by 2030.

Management has committed to maintaining Pfizer's dividend, in which case, investors may not need huge gains in share prices to earn healthy returns. However, it's important to be aware of the risks associated not just with Pfizer but with pharmaceutical stocks in general.

The costs of bringing a new drug to market can run as high as $2 billion. Even when a drug candidate reaches phase 3 testing, there's no guarantee it will win approval. The risks of lawsuits and product recalls are also high.

Investing in Pfizer stock could make sense if...

• You believe the stock is undervalued and that investors have overreacted to declining sales for Pfizer's COVID-19 products.
• You think Pfizer's drug pipeline is promising and that its recent acquisitions will pay off.
• You're seeking reliable dividend income and believe Pfizer's dividend is sustainable.
• You already have a diversified portfolio and are looking for additional exposure to the pharmaceutical or biotech industries.

Investing in Pfizer stock isn't a good idea if...

• You're looking for a quick profit, as the company could face headwinds in the short term.
• You're interested in Pfizer primarily as a vaccine stock and don't see much promise for its upcoming pipeline.
• You're concerned about the patent cliff Pfizer is facing.
• You're uncomfortable with the risks associated with pharmaceutical stocks.

Profitability

Is Pfizer profitable?

Pfizer reported 2023 full-year diluted earnings per share of $0.37, a 93% drop from the previous year. The drop was mostly driven by declining sales of the company's COVID-19 products.

The company reported revenues of $58.5 billion, a decrease of 42% from 2022. Management says that amounts to 7% operational growth when you exclude contributions from Comirnaty and Paxlovid. In its 2024 guidance, management estimates revenue of $58.5 billion to $61.5 billion, which is relatively flat growth, and earnings per share of $2.05 to $2.25.

The company also aims to save about $4 billion through the end of 2024 through cost-cutting measures that include layoffs. However, the company believes it can add up to $25 billion in revenue by 2030, with its Seagen acquisition generating about $10 billion in additional revenue.

Dividends

Does Pfizer pay a dividend?

Pfizer has been a reliable dividend payer in recent years. In January 2024, it paid a $0.42 dividend, amounting to an annual dividend yield of almost 6%. By comparison, the S&P 500 average yield in early 2024 was less than 1.5%.

Keep in mind, though, that investors have been dumping Pfizer stock since 2022. If a company holds its dividend steady when the stock price tanks, as Pfizer has done, dividend yields will soar.

Overall, Pfizer has a good history of paying a quarterly dividend and increasing it over time. Though it hasn't reached Dividend Aristocrat status just yet, it's increased its dividend for the past 15 consecutive years.

ETF options

ETFs with exposure to Pfizer

ETFs offer a good way to get exposure to an industry or trend without taking on the risks of investing in individual stocks.

• iShares U.S. Pharmaceuticals ETF (IHE 0.93%): Consider this ETF if you're seeking exposure to the U.S. pharmaceutical industry. The fund's 32 holdings comprise U.S. companies that manufacture prescription drugs, over-the-counter medications, and vaccines. Pfizer is among its top 10 holdings, with a weight of 3.87%. The ETF's expense ratio is 0.40%, meaning you'll pay $4 of a $1,000 investment toward fees.

• Vanguard Health Care ETF (VHT 0.03%): This ETF is worth considering if you want broad exposure to the healthcare sector. The fund invests in an index of healthcare stocks consisting of companies that manufacture healthcare equipment, provide healthcare services, or are involved in the research, development, production, or marketing of pharmaceuticals and biotechnology products. In all, the fund has 407 holdings. Pfizer is among the top 10, with a weight of 2.45%. The fund has a low expense ratio of 0.1%, translating to just $1 in fees on a $1,000 investment.
• Global X SuperDividend U.S. ETF (DIV 0.17%): If your interest in Pfizer is more about the dividend and less about adding healthcare exposure, check out this ETF. The fund comprises 50 of the U.S.'s highest-yielding dividend stocks. Pfizer accounts for 1.97% of the fund's net assets. The fund's 30-day Securities and Exchange Commission (SEC) yield is 6.11%. The expense ratio is 0.45%, meaning $4.50 of every $1,000 you invest goes toward fees.

Stock splits

Will Pfizer stock split?

Pfizer isn't on our upcoming stock splits calendar, and we don't expect to see it there in the near future. Companies usually split their stock to make it more accessible to everyday investors when the share price has shot up. Pfizer's shares traded in March 2024 for about $28, which is unlikely to scare away a typical investor. Pfizer has split its stock five times, the most recent of which was a 3-for-1 split in 1999.

Related investing topics

The bottom line on Pfizer's stock

In 2021, everyone wanted to know how to get ahold of shares of Pfizer's stock, driven by the release of its COVID-19 vaccine. Just three years later, the company's shares have taken an over-50% hit as sales of two of their top drugs slowed greatly, and Pfizer faces a patent cliff for some of its best-selling drugs. Not to mention that risks are always involved when investing in pharmaceutical stocks.

Yet, as mentioned, it's too soon to give up all hope for Pfizer, especially given its recent acquisitions and promising drugs in its pipeline. For instance, the company is strongly committed to maintaining its dividend and gained myriad new drugs through acquisitions.

This is a good example of the importance of researching companies rather than jumping in with both feet. As with any company you are interested in investing in, you simply must do your due diligence -- know their business models, histories, future plans, competition, and more -- to make the most well-informed decision for your needs.

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