I didn't want to start my bullish argument on pharmaceutical giant Pfizer (NYSE:PFE) on such a dour note, but there's no sense beating around the bush: Pfizer has a number of vital issues to work through in terms of its drug pipeline. I'll get into the specifics below, but overall I see two key reasons why contrarian-minded Fools may still want to consider placing some chips on the table. They can both be summarized as follows: Pfizer is a king of cash.

First off, Pfizer's dividend yield is 4.4%. That's the highest among its competitors, which include Merck (NYSE:MRK) at 3.5%, Bristol-Myers Squibb (NYSE:BMY) at 4.1%, GlaxoSmithKline (NYSE:GSK) at 3.8%, and Eli Lilly (NYSE:LLY) at 3.1%. It's also a compelling coupon for income-minded investors, and it means investors are being paid handsomely to wait for Pfizer's sales fortunes to take a turn for the better.

Secondly, Pfizer is a cash-generating machine, even though it's seen steady sales attrition in the form of patent expirations. I recently provided estimates of free cash flow figures for Pfizer and calculated that it is trading at a low-double-digit price-to-free cash flow multiple. That's also about as low as you'll find in the entire pharmaceutical industry, and cost-cutting moves over the next couple of years will allow cash flow generation to expand even as sales tread water. Cash flow trends will also support Pfizer until new drugs are approved and enter the marketplace.

Also, Pfizer's cash flow capabilities offer a fair degree of visibility into its ability to maintain and grow the dividend. The company should also be able to continue buying back its stock aggressively; for example, in 2006, it repurchased about $7 billion of its own shares.

The outlook becomes cloudier past 2008 -- primarily because Pfizer hasn't provided guidance beyond the next couple of years, but also because the future of cholesterol drug Lipitor will be highly uncertain as 2009 approaches. Lipitor is Pfizer's best-selling and most profitable drug, and it accounted for $12.9 billion of the company's $48.4 billion in 2006 revenues. It is scheduled to lose patent protection in 2010, but could face generic competition even sooner if efforts by outside firms to break its exclusivity are successful.

In other words, Pfizer will need to replace 25% of its total sales within the next three years, and it doesn't currently have anything in the pipeline capable of doing so. A restructuring initiative was announced in January, but it only offered a general road map as to how Pfizer will develop drugs and become more nimble to bring products to market.

My contention is that Pfizer has ample capital and financial firepower with which to either acquire new drugs or develop them in-house. Investors can count on a hefty dividend payment, share repurchases, and bottom-line growth over the next couple of years, but past that point, they'll have to put their faith in newly appointed CEO Jeffrey Kindler to ensure that Pfizer remains king of the pharmaceutical jungle. My bet is that the current company valuation largely ignores Pfizer's upside potential past 2008.

Think you're done with this Duel? You're not! Go back and read the other three arguments, then vote for a winner.

Pfizer is a recommendation of Motley Fool Inside Value. You can find out why with a 30-day free trial. Eli Lilly and Glaxo are both Motley Fool Income Investor picks, while Merck is a former selection of that service.

Fool contributor Ryan Fuhrmann is long shares of Pfizer but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.