Pfizer Stock Delivers 14% Capital Gains Since Late-April – Temporary Boost or Buying Opportunity (PFE)

After losing some steam in late 2018 and experiencing a six-month decline, the Pfizer, Inc. (NYSE:PFE) stock advanced 14% to regain nearly three-quarters of its losses since its 52-week high in late-November 2018.

While experiencing a decline in the aftermath of the 2008 financial crisis like many other equities, Pfizer managed to reverse the direction of its stock into an extended uptrend quickly. The company’s share price has seen relatively stable growth and advanced 270% over the past decade.

Despite the long-term rising trend, the share price did experience some volatility in late 2018 and early 2019. An especially steep drop of nearly 10% over a two-week period in mid-April 2019 pushed the 50-day moving average below the 200-day average indicating a potential bear trend. However, the share price resumed its uptrend immediately and continues rising. Consequently, the 50-day average has been increasing as well and is closing in on the 200-day average. Additionally, except for a single trading session on June 13, the share price has been trading above both moving averages since the first week of June.

While the moving averages have not given a clear bullish signal, the 50-day average trend might be sufficient for some investors to consider taking advantage of the discounted share price. However, investors that are a little more risk averse might decide to monitor the moving averages and the share price a little longer and wait for a clear moving averages crossover signal before making a move.

Dividends

The company’s current $0.36 quarterly dividend amount is nearly 6% above the $0.34 distribution payout from the same period last year. This new payout amount is equivalent to a $1.44 annualized distribution and a 3.24% forward dividend yield. Despite a steady dividend growth, Pfizer’s share price advanced at a faster pace than the company’s dividend distributions over the last five years. Therefore, Pfizer’s current 3.24% dividend yield is slightly lower than the company’s own 3.39% five-year average yield.

However, Pfizer managed to deliver a yield that exceeds the average yields of its industry peers. The company’s current 3.24% dividend yield is almost six-fold higher than the 0.55% average yield for the overall Health Care sector. Furthermore, Pfizer’s current yield also outperformed the 1.9% simple average dividend yield of the Major Drug Manufacturers industry segment by more than 70%. In addition to outperforming the yield average of the entire Major Drug Manufacturers segment, Pfizer’s current yield is also slightly higher than the 3.21% average of the sector’s only dividend-paying companies.

Pfizer has been distributing dividends to its shareholders since 1901. However, the company’s current streak of consecutive annual dividend hikes goes back only nine years. Like many other securities, Pfizer cut its dividend distribution amount during the 2008 financial crisis. However, after cutting its quarterly payout in half for the second quarter 2008, Pfizer began its current streak of dividend hikes just three periods later, in the first quarter of 2009.

Since resuming its streak of annual dividend hikes in 2009, Pfizer has doubled its dividend payout amount. That payout amount advancement corresponds to an average growth rate of 8% per year. However, the 2008 cut was Pfizer’s sole dividend reduction over the past two decades. Even with the 50% payout reduction in 2008, Pfizer managed to grow its annual dividend amount 350% over the past two decades. The company’s 20-year growth rate average of 7.8% is just slightly lower than the 8% growth rate of the current dividend growth streak.

The company will distribute its next dividend on September 3, 2019, to all its shareholders of record prior to the August 1, 2019, ex-dividend date.

Share Price

Riding the overall uptrend that began a decade ago, the share price began its trailing 12-month period from its 52-week low of $36.87 on July 5, 2018. From this low, the share price gained more than 25% and reached its 52-week high of $46.23 by the end of November 2018. However, after peaking in late November, the downward pressure from an overall market correction pushed the Pfizer stock lower.

By late-April 2019, the share price had lost 88% of those gains and dropped more than 15% to just 2.6% above its 52-week low from July 2018. However, free of market pressure, the share price resumed its uptrend again and gained nearly 14% to recover three-quarters of its losses and close on July 3, 2019, at $44.40. This closing price marked a 20.4% gain over the 52-week low from early-July 2018. Over the past five years, the share price advanced nearly 50%.

The steady share price growth combined with rising dividend distributions for robust total returns on shareholders’ investment. Just over the past 12 months, the total returns reached nearly 27%. Three-year total returns were 37%. Furthermore, Pfizer rewarded its shareholders with a total return of 67% over the past five years.

Pfizer, Inc. (NYSE:PFE)

Founded in 1849 and headquartered in New York City, Pfizer Inc. discovers, develops, manufactures and sells health care products worldwide. The company operates through two segments — Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). The Innovative Health segment focuses on the development and commercialization of medicines, vaccines and consumer health care products for application in internal medicine, vaccines, oncology, inflammation, immunology and rare diseases. Additionally, this segment provides products for consumer health care, such as dietary supplements and pain management, as well as gastrointestinal, respiratory and personal care. This segment markets its products under several well-known brands, including Prevnar 13, Eliquis, Lyrica, Viagra, Advil and Centrum. The Essential Health segment offers products that will lose or have lost marketing patent protection, branded generic products, sterile injectable products and infusion systems. It provides products under the Lipitor, Premarin family, Norvasc, Lyrica, Celebrex and Pristiq brand names.

Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.